GST threshold - join the debate

26 Nov 10 02:00PM EST
Post by Christopher Zinn
GST picture

It’s the hot button issue about tax, technology and competition that has provoked a fiery debate about online shopping versus bricks and mortar retailers. At present, Australians can buy goods online from overseas and not pay GST for products under $1000.

CHOICE’s position of arguing to retain the $1000 GST-free threshold has countered the call from retailers large and small who are crying foul about an unfair playing field.

We believe the current debate about reviewing GST-free access to goods bought overseas through online and other channels is about new forms of competition and the strong Australian dollar, rather than the tax rules.

We’ve argued that while there is a distortion from imposing GST on local purchases but not their equivalent online under the threshold, the question is whether the costs of collecting the tax outweigh any benefits.

But many retailers have vehemently disagreed and said it's unethical for shoppers to peruse the stores to check out different makes and models of everything from shoes to shirts, and GPS to camcorders, and then buy online for much less.

But what do you think?

Comments we’ve received from retailers have included:

The fact is we are just asking for consumers to pay the same costs of importing goods that we do. After all, we put food on the tables of many workers in Australia, and fill the coffers of Government just as we should. When a product is purchased overseas under the threshold, there is no benefit to Australia. All profits (and any taxes paid overseas) stay overseas. Any opportunity for the Commonwealth to collect duties and taxes is lost.

And

But if things are left to go on as is, domestic retailers will be unable to compete with overseas retailers as we simply cannot compete on price any longer. What does that mean? It means retailers going out of business: that's less choice for the consumer and the likelihood of purchases being made erroneously and warranties not being honoured, leaving consumers out of pocket.

Right now, consumers are going into Aussie stores to find the style and size they want. Once they have that information, they buy online from an overseas retailer. This isn't about retailers not becoming 21st century, this is about consumers being unethical in their behaviour, gladly using bricks and mortar stores for their research before taking advantage of a tax loophole and buying overseas. Stores here will close, brands will go and consumers will have less choice, less competition between domestic retailers.

And

I am the owner of a fabric store in Sydney. At present my customers can purchase the same fabric that I sell in store for $21-00 per metre they can purchase from US websites for $10-00 per metre. It costs me $10-00 per metre + GST to purchase the same fabric from my wholesalers and that puts me behind the eight ball before I even take into account rent, staff, electricity ... If the representative from your company, can explain to me how I can make a living and match these prices that would be great.

The Australia Communications and Media Authority recently reported that 68% of Australians using online commerce bought mostly from local sources in the last six months. The top reasons they gave were supporting local businesses and having greater trust in local suppliers.

Please contribute to the debate. Do you think it's fair that online and other purchases from OS are free of GST up to $1000? Do retailers have to adapt to new competition? What’s the fairest solution?

 

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