Dick Smith is joining Gerry Harvey’s GST line, warning of the “dark side” to buying online.
In an editorial in today’s The Australian, ex-retail boss and now national saviour, Dick Smith, has once again inflamed the GST argument, branding the “wonderful little tax rule” a detriment to both Australians and retailers alike.
Smith argues we would be better off if tax on goods bought online under $1000 was implemented, supporting his ex-rival Gerry Harvey.
Why? Because we are getting less government sponsored services and consumers really are not better off paying lower prices.
“Retailers such as Gerry Harvey get attacked if they question the fairness of some of us not having to pay the tax, while local shoppers have to.”
Last year, a retailers group headed by Gerry Harvey, Myer, and Solomon Lew’s Just Group insisted the lack of GST on foreign goods ordered under $1000 was creating an unequal playing field for Aussie owned bricks and mortar players.
However, Harvey was forced to back off from the argument following consumer backlash.
A Productivity Commission report charged with investigating the viability of introducing such a tax recently found that it would cost more to implement than it would earn in revenue for the government.
Implementing the system would cost $2bn compared to the measly $550m it would earn for the exchequer if a GST tax on goods over $20, the PC report found. However, Smith seems to have ignored this finding, published late last year.
Retailers too are getting a short deal, and will soon be forced to cut jobs and wages to stump the shortfall in profits, Smith warns, but suggests the price for all this online buying is one that, ultimately, consumers as opposed to retailers will be forced to pay in the form of job cuts and poor working conditions.
“We are kidding ourselves if we keep thinking there won’t be a price to pay for all the products we are buying off the internet without paying tax.”
“If we want low global prices, then we will most likely have to accept low global wages and working conditions.”
“We capitalists will always find a way to make a dollar, but I fear it is ordinary Australians who will eventually pay the price.
“Could it be that we have all become so selfish we put purchasing directly from overseas without tax in front of the interests of those who are going to lose their jobs here?”
However, Smith appears to be missing the point. Retailers here have enjoyed super sized profits for years, charging excess prices on goods that cost considerably less elsewhere.
A recent trip to Europe once again reminded this writer of this hard fact.
Australia is far too expensive for goods, full stop. And online selling has exposed the rip off retail emporium that is Harvey Norman and his high street neighbours, who are now running scared.
And the old importing and shipment costs argument Aussie retailers have propelled here for years doesn’t wash any longer either, as many of the goods are imported from China anyway – far closer to here than the US or Europe.
E-commerce is rising around 11 per cent annually in Australia, with more than 10 million of us now shopping online for everything from TV, games to clothing, realising such goods can be bought for far less than bricks and mortar sellers previously indicated.
And some (competitive) Aussie retailers have done well from online, including JB Hi-Fi who reported an 80% rise in web sales as have the Dick Smith chain, now owned by Woolworths.
Harvey Norman has even bitten the bullet by setting up its own e-comm site and has began a competitive pricing strategy, which could save the troubled retailer from oblivion.
Read the Dick Smith article in full here.