Retailers to push on with GST-exemption campaign despite Productivity Commission concerns

Retailers have promised to continue to push the Government to drop the GST exemption on goods purchases from overseas valued at less than $1,000, despite a Productivity Commission discussion paper casting doubt on whether abandoning the exemption would change consumer behaviour.

A spokesman for Assistant Treasurer Bill Shorten has welcomed the paper, and has repeated advice from the Board of Taxation that it would be more expensive for the Government to administer a reduction in the GST-free threshold for online purchases than the Government would stand to collect.

But the Fair Imports Alliance, which comprises a number of retail bodies including the Australian Retailers Association, has stuck to its guns, demanding more information from the Government on the number and value of imports coming in under the threshold. This question is the subject of a current Customs review.

“The current situation, as it stands, is anti-competitive,” spokesman Brad Kitschke says, adding that the $1,000 threshold is the highest in the world.

The PC Economic Structure and Performance of the Australian Retail Industry Issues Paper, released yesterday, says: “Based on the preliminary evidence available to date, it appears that even a large reduction in the threshold may not necessarily have a significant impact on the number of parcels not subject to GST and duty.”

“While a lower threshold would subject more low-value imports to GST and import duties, the additional revenue collected would need to be considered against higher compliance costs for both Australian consumers and businesses and administration costs,” it says.

The Commission, which is set to make its final report to the Government in November, further warned that consumers and businesses could be subject to increased delays in receiving goods, and might need to pay customer agents’ fees should the threshold be decreased.

While the discussion paper said the average value of parcels entering Australia came in at less than $100, the Fair Imports Alliance says there is no data reference for that figure, and says it is fearful a dearth of relevant information will leave the Commission unable to make a decision later in the year, and therefore further delays.

Shorten’s office says while online trading is one factor be considered for retailers, the future of the sector hinges on more than this issue.

“The debate has moved on,” the spokesman said.

Retail veterans including Gerry Norman, Solomon Lew, and Bernie Brookes launched a controversial media blitz against the GST exemption in January, complaining that online shopping sites have an unfair advantage to bricks-and-mortar because they are not required to apply the tax to purchases under the value of $1,000.