'We'll block Aussie shoppers,' warns eBay

Online marketplace threatens to geoblock Australians if imported goods are hit with the GST.

Australians could be blocked from eBay's online marketplace if imported goods are hit with a 10% tax, the company has warned.

The move would be necessary for eBay if it is to comply with legislation due to be introduced on 1 July, says Jooman Park, the managing director of eBay Australia.

"Regrettably, the Government's legislation may force eBay to prevent Australians from buying from foreign sellers," says Park, in his submission to the Senate inquiry.

"No tax would be paid to Australia and none would be owed. It would raise no revenue, deny Australians access to choice and lessen price competition."

The introduction of the tax was seen as a way to help brick-and-mortar retailers compete against overseas rivals, but Park disagrees the introduction of the tax will help local businesses.

"This solution would not even represent a win for bricks and mortar retailers, because Australians would still find ways to buy online. They would do so direct via dot.coms without paying GST.

"This appears to be the most likely outcome at present."

The government announced imported products below $1000 will be subject to the Goods and Services Tax (GST) as part of the 2016 Federal budget, in a measure expected to generate $300 million in its first three years.

The tax will help drive growth in the retail market, says Russell Zimmerman, the executive director of Australian Retailers Association, the peak body representing 7500 retailers.

"We support the legislative basis which would see offshore suppliers of tangible goods and services collecting and remitting GST to the Australian Government," says Zimmerman, in a submission to the Senate inquiry.

"This is a modern approach which will defer administrative costs from Government."

The idea of taxing goods below $1000 was abandoned in 2011 when a report by the productivity commission found the $495m generated by the tax would be offset by the $1.2bn it would cost to implement.

Consumer advocacy group CHOICE expressed its support for the principle of tax-neutrality, but expressed concerns that the "bill would not lead to fair or simple outcomes".

"[We are] extremely concerned that the proposed change to the GST LVT will lead to additional costs to Australian consumers, on top of the GST collected. It is also likely that the cost of administering the scheme will be greater than revenue raised," says Erin Turner, acting director of content, campaigns and communications.

She says there's still a lot about the new tax that is not known.

"The Treasury has not released any modelling on the impact of the proposed LVT changes. They have only provided the revenue expected to be raised across the first three years with no detail on collection costs or the impact of the measures on businesses, consumers or the wider economy."