Timing will depend on the time required to upgrade computer systems, and increasing staff numbers to deal with the higher volume requiring manual data capture in the international mail stream, as well as required staffing changes to deal with increased volumes of items requiring GST assessment and collection.
The movement of cargo was severely disrupted and border security compromised over a two-month period when the import component of the Integrated Cargo System (ICS) was introduced by Customs in 2005.
This happened due to the lack of pre-testing of new systems and software, a lack of industry readiness and training and lack of staged implementation of the change. The government will want to avoid repeating such a failure.
The Taskforce noted three things. First, it would not be practical to just lower the threshold without any system changes and considerable preparation. Secondly, depending on issues such as to who will collect the GST from the Australian consumer – there are a number of options, or a combination of options – and the extent of system changes required, initial reforms could be implemented within two years.
Thirdly, once a decision is made to lower the threshold, reductions in the threshold to its long-term level should take place in stages. This allows all relevant parties to review how the first stage was implemented, and it allows for adjustments to systems in readiness for the extra volume numbers associated with the further reduced threshold.
All this suggests that a lower threshold cannot be introduced very early on in the first term of the Abbott Government, the prevailing political wisdom being that distasteful reforms need to be introduced very early in the term of a new government.
Further, the desirable staged reduction in the threshold to its ultimate long-term level may push implementation of this reform agenda into a new federal parliamentary term, which raises the prospect that part of the reform would have to run the gauntlet of an election.
Jean Baptiste Colbert once said: “The art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the least amount of hissing.” The low value import threshold issue is likely to be the new government’s first real test on “public” tax reform. It is hoped that substantial consumer hissing will not divert the government from sound decision making.
Dale Boccabella and Kathrin Bain will present a paper on the GST low value import threshold issue at the January conference of the Australasian Tax Teachers Association in Brisbane, 20-22 January 2014.
Dale Boccabella is an Associate Professor of Taxation Law, Australian School of Business at University of New South Wales.
This article was originally published at The Conversation. Read the original article.
