Retailers lobbying the Government to impose a tax on digital sales say a new report from the Customs Department shows packages are being deliberately undervalued in order to avoid paying GST and other duties.
The accusation comes in the last two days in which interested parties can lodge submissions to the Productivity Commission, which is undertaking a review of the retail industry in order to see whether GST should be imposed on online sales.
The Fair Imports Alliance says the Customs report – which the alliance says was deliberately withheld until the last minute – paints a damning picture.
“We’ve asked for it for quite awhile, and they sent us the report. Obviously it’s concerning that it shows there is areas of abuse in the low value threshold,” Fair Imports Alliance spokesman Brad Kitschke says.
The Customs department report is available online, and Kitschke says it shows there is a clear indication goods are being deliberately undervalued in order to escape paying GST.
“There is a leakage of revenue from the Government by people who are deliberately undervaluing packages. We’re quite concerned there is abuse in the threshold and that this is occurring regularly.”
The Customs states that for every package that has been identified as being undervalued, the average revenue implication was $330 for packages shipped through air and sea cargo, and $275 for international mail packages.
The Fair Imports Alliance has previously argued the Government is missing out on several hundred million dollars in GST revenue as a result of undervaluations, and this report seems to give weight to their cause.
Currently the threshold is set at $1,000 – if goods cost more than this they are subject to tax.
However, previous research uncovered by SmartCompany has found that most goods bought online and shipped into Australia cost well under $1,000. Unfortunately, Kitschke says the Customs report doesn’t break down shipments into specific categories.
And in any case, Kitschke wants the threshold lowered.
“It doesn’t go into specifics about the types of goods that are shipped. We would have liked to have seen a greater breakdown, such as whether these are consumer-based goods.”
However, Kitschke says this is likely, pointing to websites which he says are “deliberately advertising” the fact they will undervalue their goods when shipping them to Australia. A list of these websites was requested by SmartCompany, but was not received in time for publication – they are contained in the Fair Imports Alliance submission to the Productivity Commission, due for release today.
Kitschke also says the report does not mention if fines were issued, and further clarification has been sought.
“This report reinforces our view there is abuse of the threshold,” he says, adding that a tax must be imposed for online sales.
“We’re obviously looking for a reduction in the threshold to assist retail in this changing marketplace.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
