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The Gillard government aint gonna budge quickly on GST and has rejected calls for an immediate reduction in the GST threshold

That’s according to Assistant Treasurer David Bradbury MP, who revealed the Gillard Government’s response to the recent report which recommends GST be charged on online goods ordered from international retailers, under $1000.

The Low Value Parcel Processing Taskforce report, released Friday, says the current low-value import threshold should at least be halved from $1000 to $500 and then to a level as low as $20 – a move that should be done “as soon as practicable.”

This would push prices of goods purchased from foreign retailers up by as much as 10%, something consumers may not be happy about. 

However, its not as easy as that, and “there are no simple or quick solutions” to the GST issue, Bradbury said in a statement yesterday.

“The PC found that the low value threshold for GST and duty on imported goods was not the main factor affecting the international competitiveness of Australian retailers,” he said.

The Government  also “recognises that Australian consumers enjoy the convenience and choice provided by online shopping and any tax advantage associated with the low value import threshold for GST are not necessarily a decisive factor.”

The LVPT report also concluded that it would not currently be cost-effective to do so without significant improvements in the efficiency of processing parcels, he noted.

However Aussie retailers are calling for immediate reform to the GST system and say the $1000 threshold is making their products appear artificially uncompetitive to consumers.

All major retailers support the reform including e-tailer The Iconic who told SmartHouse “we strongly want the threshold to go down.”

The government said it will begin preparing ‘possible’ plans for reforms to parcel processing and ensure costs and benefits of any changes are considered and will consult with the Retail Council of Australia and Australia Post.

In other words, it will be a good while before any decision is made, either way.

58 million parcels enter Australia every year as consumers ordering goods online increases, and it is likely to jump further in the future.

Online retail sales, both domestic and overseas, still only account for around six per cent of total sales, with international players accounting for under 1.5% of that figure.

However, Australian retailers should not be disadvantaged by taxation arrangements which favour overseas retailers and the current threshold of $1,000 is very high by international standards, Assistant Treasurer Bradbury added.

 
The government will issues final response to the Taskforce report in 2013, although onlookers reckon in an election year any moves to upset consumers may not be forthcoming from the Gillard government.

Consumer watchdog Choice says new proposals to lower the GST threshold would risk penalising Australian consumers for the actions of overseas businesses over which they have no control.

But the consumer group says lowering the threshold must produce net benefits for the Australian community, and not impose penalties on consumers.

“The problem of collecting GST from overseas businesses is that they have no obligation to pay it,” says CHOICE head of campaigns, Matt Levey.

“Choice fully supports a level playing field for Australian retailers…but there is currently no business case, no cost-benefit analysis, that shows you could immediately lower the threshold and raise more from the tax than you would spend on collecting it.”

 It is calling on the Federal Government to avoid a “knee-jerk response.”

But it looks like there is no fear that will happen.

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