According to Federal, Assistant Treasurer Bill Shorten mass retailers such as Harvey Norman, Dick Smith, Myer and David Jones, have been sending their buyers to Asia to buy “cheap goods” for years with the goods then sold at “exuberant” prices.Speaking on the 7.30 Report Shorten took a swipe at mass retailers, who had been singled out in the recent Productivity Commission investigation of retail activities in Australia, for charging up to 50% over the price of the same goods overseas.
The Commission accepted arguments from retailers that the GST-free threshold for imports should be below the current value of $1,000.
Shorten says the commission’s draft report found it would cost $1.6 billion to recover the $500 million in GST tax.
They went on to say that the method of collecting the tax at Australia’s borders has to be far more efficient to make the change cost-effective.
The Commission claims that even with an additional 10% GST charged on imported goods, consumer behaviour would unlikely change as many products will continue to be significantly cheaper overseas retailers via online sites.
The Commission pointed out that an LG refrigerator costing $2500 at Harvey Norman, which is chaired by billionaire Gerry Harvey and who was the initial face of the retailers’ campaign against the internet, is available to American consumers from Amazon for just under US$1500. (A$1,388).
A Sony Nex 5 Digital Camera was revealed as being more expensive online in Australia than at a local retail store. At Harvey Norman the new digital camera sold for $1,097, where on a local web site the same camera was listed at $1129, while at a US online store the camera was being sold for US$650 (A$601).
The report said that the existence of price differences in identical goods is not an uncommon or a new phenomenon in the world of retailing.
Gregory Hibbert told the Commission “It is widely and frustratingly understood by adult gamers in Australia that we are grossly discriminated against when it comes to retail prices on video games (as well as other retail products)”
“My personal level of frustration grew even further as the Australian dollar reached parity with the United States dollar and prices here only climbed. Still we are being told to pay more than double in retail stores”.
Following an investigation of retail pricing in Australia the Commission found that comparisons show that for the majority of products examined, the cheapest price offerings were from online retailers rather than from Australian bricks and mortar stores (even after accounting for the shipping and delivery fees).
They said that the majority of lower price were from international online retailers.
Of the five product categories reviewed by the Commission, some had consistently lower prices online and that all goods (except for one) in the books, DVDs and music category were cheaper from online retailers.
They said that the difference was 50 per cent or more compared with some Australian bricks and mortar stores.
While the Productivity Commission report says the GST exemption is only a “minor part” of the competition, it says the broad-based consumption tax should be reduced to a low level to “ensure tax neutrality”.
But it emphasises the need for greater efficiency in collecting the tax.
Australian Retailers Association [NRA] executive director Gary Black told ABC News Online “We strongly support the recommendation that the threshold should be reduced.”
“If we were to abolish the GST exemption tomorrow… the Australian taxpayer would be up for a bill of three times as much as the tax we’re collecting – that’s crazy,” he said.
Mr Shorten said the government would examine ways to reduce the costs of collecting GST on imported items valued at less than $1,000.
“We will start discussions, but let us be very clear – that process could take several years,” he said.
