An interim review of GST distribution has backed retailers in their push for the Government to address the growth of offshore sales by introducing a tax for imports.
While the Government has all but abandoned the idea, small business is still hopeful international businesses will be charged GST with Council of Small Business of Australia chief executive Peter Strong saying the move is “inevitable”.
“This isn’t about fairness of sales any more. There is going to be a shortfall every year, and they have to fix it. This is the easiest way to do it.”
The interim GST review handed its report over to the Government yesterday, with a full report to come later on in the year. Total GST revenue is expected to grow 5.4% a year by 2014-15 it said, but online sales are expected to rise to between 10-15% of all sales over the next few years.
As a result, the shortfall in GST revenue will grow wider. The report recommends implementing GST on imports, which could include charging them at the source – through card holders such as Visa or MasterCard – or through other methods.
The report also suggests lowering the $1,000 import threshold, or “a self-assessment model, requiring major offshore suppliers to pay GST, or collecting GST through overseas jurisdictions or card issuers”.
The Productivity Commission said in its report last year it would cost more than it would save to drop the threshold and levy GST on digital sales.
But the review panel has backed small business, saying it supports efforts to crack down on the growth of international parcels not paying GST. Businesses say that with the massive growth of bulky mail, causing multiple financial and strategic headaches for Australia Post, a higher tax is necessary.
Strong says he is “very confident” the Government will charge GST on online sales.
“I think as time goes on, we have won this argument, and it’s not just about the fairness of sales, but it’s also about the budget now,” says Strong.
“There’s going to be a shortfall every year.”
“It’s going to happen. It’s just a matter of when.”
Treasurer Wayne Swan addressed the report yesterday, saying the Government will wait until the full report is handed down to make any key decisions.
“While we understand that states and territories will naturally pursue their individual interests, the Gillard Government will continue to act in the broader national interest to ensure a strong economy and high-quality services for all Australians,” he said in a statement.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
