SMEs split on GST threshold: SmartCompany survey results
Tuesday, December 3, 2013/
Many advocates of lowering the GST-free import threshold say its current level is making things harder for small businesses.
But support for lowering the threshold among small businesses isn’t assured. According to a SmartCompany survey, conducted from last Friday to Monday this week, small businesses are split on the issue.
A narrow majority favour either leaving the threshold where it is (49%), or raising it (6.3%). Overall, 55% support either maintaining the status quo or making it more accommodating to those importing goods.
Australia’s $1000 GST-free threshold is high by global standards, but most countries have some kind of GST-free threshold.
However, our survey found a not insignificant portion of small businesses (18.9%) favoured applying GST on all imported goods, with no threshold below which goods do not attract the tax.
Among small businesses, of those who favoured lowering the threshold, the most popular option was having no threshold. This was followed by lowering the threshold to $100 – favoured by 9.2% of SME respondents. The third most popular threshold was $500 (chosen by 8%).
Our survey also polled a small number of large businesses. While the low response rate makes these answers more suspect, we found those in large businesses were slightly more likely to favour leaving the threshold where it is. Where they did suggest lowering it, they were more likely to suggest a $500 or $800 threshold. At such levels, the Productivity Commission is more likely to break even on its collection costs.
Respondents were given the option of elaborating on why they had the preferences they did.
Among those who supported lowering the threshold, most cited job losses in retail or the need to create a level playing field between online and bricks-and-mortar retailers.
A small retailer said: “Australian businesses should not be disadvantaged.
“I would suggest a 20% GST + handling charge to be applied on purchases under $1000, to make people reconsider if it’s worth the trouble of purchasing from overseas.”
One SME manufacturing business took a different view.
“Changing [the threshold] would be destructive to the growth of commerce in Australia.
“The only reason people want to change it is because a few retailers think they would have much loftier profits if they could gobble the little fish up. But they need to do what everyone does when business isn’t going well. They should examine what they can do better for their sales and customers. Everyone has to work harder in this economy.”
Most businesses who supported lowering the threshold said it would only be fair to do so. Those who supported leaving it where it is were likely to say lowering it wouldn’t make much difference anyway, and to say it wouldn’t make economic sense for the government to tax imports.
A quarter of respondents said they worked in retail. Of these, only 30.2% supported raising the threshold or leaving it where it is.
A clear majority of respondents in retail favoured lowering the GST threshold. The most popular option was, again, to make all imported goods qualify for GST. The next most popular threshold was $100, then $20.
“The GST was implemented as a broad-based tax on consumption,” one retailer said. “As more spending moves offshore the tax needs to move as well. It is either that or the rate of GST will need to rise.”
Retailers, who supported the current level of the threshold, or those who preferred an $800 or $500 threshold, mostly cited collection costs, saying it would make no sense to lower the threshold if it would cost more money to do so than it would bring in.
In total, 207 respondents completed the survey. Most (174) of these were small or medium-sized businesses with 200 or fewer staff.