In recent months, the Australian Federal Treasury has
come under intense pressure from local retailers and state
treasurers to extend the Australian Goods and Services Tax (GST) to
overseas-purchased goods and services. On 27 November 2013, the
Australian Federal Treasurer, Joe Hockey, met with state treasurers
to discuss these controversial proposals for reform.
At present, goods and services purchased by Australian consumers
from overseas are exempt from the 10 per cent GST, provided they
are valued at less than AU$1,000. National retailers argue that
this gives foreign retailers a price advantage and encourages
Australian consumers to shop extraterritorially. In an era where
the profile of international retailers in Australia is spiraling as
ever-increasing numbers flock to the region's shopping malls
and high streets, the threat looms large. Some national stores such
as Myer believe the import loophole affects them so badly that they
may even be forced to consider shipping products via New Zealand,
so as to level the playing field with foreign competitors.
In support of their stance, retail groups have been keen to
emphasize the tax revenue stream that reducing, or even removing,
the GST threshold would generate. Russell Zimmerman from the
Australian Retailers' Association commented recently on ABC
News: "The government, through the Productivity Commission
Report, was told that if the threshold was lowered to $100 that
there would be in excess of $500 million worth of tax collected.
However, we believe that if the threshold was lowered to around
about the $30 mark, collection of goods and services tax would be
in excess of $1 billion".
However, not all are in favour of reform. Some economists point
to research by the Productivity Commission in 2011, which concluded
that the cost of administering the revenue collection against
additional imports caught by an extension of GST would be higher
than the amounts raised. It has also not gone unnoticed that the
federal government had originally promised that GST would be
sheltered from reform during its first term.
Consumer group CHOICE also warns that it is Australian shoppers
who will bear the brunt of the proposed "Internet tax" :
"Australia does not need a new tax on the Internet
designed to prop up parts of the local retail sector, hitting
consumers with big costs and delays, and dragging down our
competitiveness" (Matt Levey, Choice campaign director).
The pressure group also points to the results of a survey which it
conducted in 2013, which found that only 12 percent of Australian
consumers selected savings on duties and taxes by purchasing on
overseas websites as a reason for shopping online. For most of
those surveyed, factors such as convenience were felt to be more
At the November Treasury meeting in Canberra, the federal
Treasury was presented with a range of potential options and state
treasurers were given an opportunity to air their views. However,
reports from the meeting were disappointingly vanilla. A statement
released by Joe Hockey said, "On GST, the states were
provided with the material they had previously requested on the
costs of any changes to the online threshold. They will now
consider that advice...There was no agenda item to discuss any
changes to the base or rate of the GST." Indications are
that a final decision has been deferred until March 2014.
For now then, it seems that Australian consumers are free to
take advantage of the overseas GST exemption. However, the debate
is far from off the agenda, and national retailers will be
determined to get their proposed reforms in their shopping
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discussion of the subjects dealt with. It is not intended to be,
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Exemptions or concessions on stamp duty could apply when contemplating the purchase or transfer of NSW real estate.
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