While retailers may have welcomed a new report into the GST low-value threshold that suggests offshore goods should be subject to the same taxes and charges as domestic parcels, experts point out the report deals with a bigger issue.
Not only does it highlight issues with taxation, but it also goes into specific detail about the current parcel system, along with the country’s logistics and transportation issues – and makes a huge number of recommendations to fix them.
Using pre-arrival electronic data, introducing a simpler way to record GST and putting Customs in charge of a range of new responsibilities are just a few of the ways in which the report recommends overhauling the distribution system for parcels.
It’s an apt time to recommend these types of fixes.
Australia Post constantly complains of being inundated with parcels, creating a huge backlog in its cramped retail locations. Customers receiving parcels often have to wait until weekends to receive their packages as they can’t pick them up in work hours.
The current system was never meant to handle this volume of parcels. As online retail expert Steven Noble points out, businesses have noticed as well.
“You’ll hear plenty of Australian online retailers say that it’s cheaper to send from a warehouse in New Zealand to shoppers here than it is to send something from a domestic warehouse to an Australian customer.”
“That’s an indication that something is broken.”
Last week, Australian Retailers Association executive director Russell Zimmerman told SmartCompany the Federal Government has to address the GST issue, and chiefly because it will have to address the logistics system anyway, given how much strain it’s under.
“The capacities at international mail gateways and licensed depots are under increasing strain,” the report states.
There are dozens of recommendations in the detailed 300-page report. But here are just a few of the ways it recommends changing the postal system to cope with the rise of online shopping:
The removal of duplication
Part of the problem with the current postal system is that there are duplications. Both Customs and Australia Post are doing the same thing and this creates inefficiencies, meaning that extra revenue gained from taxing offshore purchases would be lost in logistics costs.
The report recommends a few ways of reducing duplications, including removing Australia Post from its current role in opening mail as a second examination of offshore purchase. If Customs did this alone, there would be no need for a second check.