01.Government releases report
The Australian Government has released a report which outlines possible ways in which the GST could be applied to goods and services bought from foreign-based websites such as Amazon and the Book Depository.
Websites based in Australia already charge GST.
The report was presented to the Retail Council, which was formed after the Productivity Commission’s report last year into the retail industry. A major focus of the Council is to assess how the tax exemption on imported goods could be lowered or abolished.
The exemption, known as the Low Value Threshold (LTV), currently stands at $1000.
The report’s recommendations
The report recommends several reforms to how parcels are processed by Customs and courier services, including Australia Post. In particularly it calls for more automated and streamlined processes and the exchange of data between Australian and international agencies.
The report also argues that Australia Post and other carriers should be empowered to charge fees to recoup to costs of collecting the GST.
However the recommendations of the report are long sighted. In the meantime they recommend a staggered approach in which the current LVT is slowly lowered. During this time GST will be collected based of the declared value of the product.
What CHOICE wants
CHOICE, which is a member of the Retail Council, supports the principal of tax neutrality however does not support lowering the LVT unless it can be shown that it will be able to raise net revenue.
CHOICE is also concerned that lowering the LVT could result time delays as packages are assessed for their tax liability. Consumers may also become subjected to administrative burdens, such as customs declarations. Lowering the LVT will also expose consumers to additional costs, such as customs duties and processing fees by Australia Post and others.
Finally, the savings consumers receive online far exceed 10%. CHOICE’s recent research in IT products showed that Australian prices were approximately 50% higher than in the US. Expanding GST to include more online products will therefore only have a minimal effect on consumer purchasing behaviour.
CHOICE opposes any scheme that is unworkable or hurts consumers.
Be sure to sign up as a campaigns supporter to keep up to date with all of our campaigns.