The retail industry has been hit with a massive blow in this week’s federal budget, with import processing fees for all transactions worth more than $10,000 set to rise.
The charge will upset industry veterans who have been advocating for GST to be charged on imports worth less than $1000.
The budget papers this week revealed a new Import Processing Charge system to ensure full cost recovery.
“The government will restructure the Import Processing Charge to recover the costs of all import related cargo and trade functions undertaken by the Australian Customers and Border Protection Service,” it said.
Russell Zimmerman, the executive director of the Australian Retailers Association, told SmartCompany this morning the new charge will make it more difficult for retailers – both online and bricks-and-mortar.
“The government is just trying to make it more difficult for retail businesses that are trying to employ people and ensure jobs.”
“This is a move that should never have happened, particularly when retailers are lobbying for the GST threshold to be lowered to increase the competitiveness of both online and bricks-and-mortar retailers.”
Any consignments worth more than $10,000 will now see charges rise from $102 to $152 for sea shipments, and $81 to $122 for air travel consignments.
Anything below the $10,000 threshold will cost the same.
However, while the consignment charges are monitored and processed by the Customs service, Hunt & Hunt lawyer and trade expert, Andrew Hudson, told SmartCompany none of the revenue raised from the scheme will go to Customs.
“The money raised will go into general revenue,” he says, based on a conference call held with the government and industry figures yesterday.
“This is another hit for retailers which bring in product in large deliveries of products. It’s another cost they’re going to have to pass on.”
The timing of the charge is controversial. Retailers are still lobbying the government to lower the GST threshold charged for imports, in an attempt to place offshore online retailers on an “even playing field”.
The decision to charge large retailers more for imports while ignoring the GST issue will no doubt be provocative among retailers.
Hudson says the $10,000 limit is quite low for large retailers, and will have a large impact on costs.
“This is going to encourage people to reorganise their imports to bring them under the threshold – and Customs is already concerned about that happening with the GST issue.”
Hudson says the costs should have been increased over time.
“Even the Tax Office talks about increases far in advance. We would have wanted to see something phased in.”
The new costs will come into effect from January 2014.