The Retail Coalition that is campaigning to have the Government abolish the GST exemption on purchases made overseas has an unlikely new member – domain name reseller and web hosting firm Netregistry.
While Coalition spokesmen Gerry Harvey and Solomon Lew have been slammed for suggesting that consumers who purchase goods from overseas websites under the $1,000 GST threshold should lose the GST exemption, Netresigtry founder Larry Bloch says he felt it was important to stand up for small businesses who were being affected.
“We’ve been noting over the last six months or so a great deal of anxiety among small businesses around trading conditions,” Bloch says.
He points to weak consumer sentiment, the strong dollar and high interest rates as part of a “perfect storm” hitting SMEs.
“This particular GST and duty issue isn’t one that small biz would be concerned with if it wasn’t for this perfect storm.”
Bloch concedes the Coalition’s message was “poorly delivered and probably by the wrong messages” but says he simply cannot understand why an Australian retailer selling identical goods to an overseas retailer are losing customers because they are forced to build GST and import duties into their prices.
“I think the issue has gotten lost against so-called fat cat billionaires. Really it’s got nothing to do with that. It’s a simple matter of a fair go,” Bloch told SmartCompany.
“Nobody wants people to stop shopping online – it’s simply about a fair and level playing field for small business.”
Despite the angry backlash from consumers, Bloch says he believes Australian consumers will eventually start considering the consequences for local businesses of online purchases and will be prepared to pay “a buck or two more” to support local industry.
“It’s just the price of playing fair.”
Bloch also points out that many overseas countries including Britain, the United States and many European nations charge duty on import duties on purchases above thresholds that are much lower than Australia’s. In Britain, all purchases over £18 attract duty, while in Sweden all internet purchases attract duty.
Bloch says he has faced the problem in his own business. Several years ago, a US-based domain name reseller was able to sell Australian domain names from an overseas website without charging GST. After a long campaign, the policy was reversed and the overseas operator was forced to establish an Australian entity registered for GST purposes.
Despite the Coalition’s on-going campaign, the Government does not appear to be budging on the issue – as Prime Minister Julia Gillard made clear yesterday.
“I would be very reluctant to see Australians who are facing cost of living pressures not able to access shopping on the internet in the way that they access it now,” she said.
Bloch says Labor has been scared off introducing new taxes after it’s bungled introduction of the mining tax, but says Netregistry is prepared to make a submission to the Productivity Commission inquiry the Government has set up to examine the issue.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
