GST on online goods purchased abroad may jump 10% as the NSW Treasurer makes a fresh call to slash the GST threshold to $30.
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NSW Treasurer Mike Baird is calling on the government to change the GST rules for goods purchased online from overseas and lower the threshold from the current $1000 to just $30.
The move, if implemented, would please retailers like Gerry Harvey, Bernie Brookes and Co – Mr Harvey in particular was lambasted by consumers following his call for similar GST threshold cutting measures last year, calling on the government to make the playing field fair for domestic and international retailers selling online.
”It’s clear that the GST base is growing less than anticipated and the government needs to look at all options to replace revenue that is essential to deliver services and the building of infrastructure,” Baird said.
”It’s time that we seriously consider online retailing because it is growing exponentially and means that our domestic retailers aren’t competing on a level playing field.”
However, this would mean a jump in the cost of purchasing goods from international retailers as much as 10%, to the dismay of price savvy Aussie consumers.
At the moment, consumers who purchase clothing, electronics or other durables from international retailers don’t pay any additional GST if the goods are worth under $1000.
Mike Baird, made the proposals as a recent Productivity Commission report, examining competiveness in the retail sector, also proposed similar moves, but only if was cost effective to do so.
The PC report found is was currently not cost-efficient to do so without significant improvements in the efficiency of processing low value parcels coming through customs.
However, the Low Value Parcel Processing (LVP) Taskforce, set up buy the PC to examine how to efficiently process thousands of parcels coming in from overseas each week, delivered it recommendations yesterday, indicating Customs and Border Protection, DAFF Biosecurity, the ATO, the States and Territories and Australia Post would need to work together to implement the new rules and processes.
The report also found that any streamlining of the processes involved in the handling of imported parcels, would require “significant change,” indicating it may be some time yet before the changes to GST are implemented.
Mr Baird also admitted to Fairfax Media there was “more work to do” in examining the administrative costs involved in implementing the new rules.
The lowering of the GST threshold to $30 would put Australia in line with other countries such as the UK, where the threshold is particularly low at around $28, while Canada is slightly higher and the US is $200.
The Productivity Commission estimate online represents 6% of total Australian retail sales – 4% domestic ($8.4 bn) and 2% from overseas sellers ($4.2 bn); however, projects this to grow by 10-15% per year over the next three years.
The Australian Retailers Association welcomed the LVP report and said it outlined a “economically propitious plan towards achieving a level playing field for online, traditional and multichannel Australian retailers alike.”
ARA Executive Director Russell Zimmerman said the report highlighted the need to address and remove the inherent disadvantage currently presented to Australian retailers as well as open up a revenue stream for state and territory governments.
The ARA are calling on the Government to “implement the report’s recommendations as soon as practicable given the obvious win- win situation for retailers and the economy.”
Mr Zimmerman also told Channel News the ARA was currently in discussions with state governments on the issue and although could give no indications of how soon the new rules could be in place, said he hopes the changes are implemented “very quickly.”