Tax changes to bump clothing, electronics prices
Applying the GST to
small purchases of goods from overseas sites could bring
in $400 million to government coffers with the price of
clothes and electronics bought online the heaviest hit,
analysts say.
The Abbott government wants to slap
GST on offshore online sales. Federal Treasurer Joe
Hockey and state treasurers last week agreed to impose
GST on downloaded music, movies and books, making them
more expensive for consumers but bringing in extra
federal revenue. The $1000 GST-free threshold for
imports could also be lowered.
Retailers such as Harvey Norman boss Gerry Harvey and
Solomon Lew have long pushed for the government to
impose the GST on online sales.
Mr Harvey said politicians had finally seen the light
after being more concerned about an electoral backlash
than the integrity of the tax system. |
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He said the GST threshold meant online retailers had
benefited at the expense of bricks and mortar retailers.
"It's affected department stores and people who sell
shoes, or clothes, or handbags, or musical equipment, or
sporting goods, all that sort of thing, but not me," he
said. "I only ever brought it up because I thought it
was wrong and unfair."
Mr Harvey also rejected suggestions it would cost more
to apply the GST on small offshore purchases online than
it would bring in in revenue.
"All you had to do
was find the top 100 people that were sending it in, get
onto them all and say, 'charge GST otherwise you can't
send anything in'," Mr Harvey said.
Under the government's plan, being dubbed the "Netflix
tax", a company providing an "intangible service" into
Australia would charge GST on those services.
Domestic online purchases account for about 75 per cent, or $4.2
billion, of all online purchases in Australia. Adding
the GST on them suggests more than $400 million of GST
revenue, only if every online purchase comes back to
Australia.
But if the GST is also applied on
services, the total revenue raised could reach billions.
Growth in online sales continues to outpace growth at
bricks and mortar sores, but has slowed thanks to a
weakened Australian dollar and local retailers pouring
money into online to fight international rivals.
Online sales are estimated to have grown 8.7 per cent in
the year to February to $16.7 billion, NAB says.
This was the equivalent of 6.9 per cent of spending at
traditional bricks and mortar retailers.
A 2011
Productivity Commission report found "strong
in-principle grounds for reform to promote tax
neutrality" but concluded the government should not
change the laws unless it was cost-effective.
Consumer group Choice said there was "no evidence that
lowering the tax would raise net revenue".
"Australians already face price premiums of 50 per cent
and more compared to overseas consumers for some
identical products," it said.
"The risks are
about an approach that might impose significant red tape
and collection costs on households, with the only gain
being for some local retailers who may be struggling to
compete in a global marketplace."
Analysts say
Australian retailers won't win all that much from a
change because price is just one reason for buying from
an overseas website; product range and convenience are
also key.
"The crucial factor will be where they
drop the threshold to. Many online purchases are $100
and less, even from offshore, so unless they drop the
threshold to $100 or less, it may not have much of an
impact," one said.
Source:
Sydney Morning Herald , dated 13/04/2015
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