Major Australian retailers are calling for the Government to reduce the low-import threshold to $100 and impose GST for online sales, but consumer groups say retailers are simply failing to entice customers into their stores.
The recommendations are contained in a new submission to the Productivity Commission, which has received nearly 90 reports from retailers, industry bodies and individuals.
The commission is due to deliver a draft report in two months’ time, but is already facing an increasingly orchestrated campaign from retail giants determined to make consumers pay more to shop on foreign sites.
In its submission to the inquiry, department store Myer calls for the Government to end the “free kick” for online markets.
“Myer is concerned about the duty and GST loophole that provides overseas online retailers with a clear advantage over local retailers,” the submission states.
Myer’s submission claims that even a $100 threshold would be “far higher” than any developed country equivalent.
The Australian National Retailers Association – representing retail giants David Jones, Coles, Woolworths, Bunnings and Harvey Norman – has also proposed a $100 cap.
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ANRA warned that if online spending rates in Australia eventually match those in the United Sates or the United Kingdom, the value of internet shopping could come close to $22 billion a year, with about $9 billion of that spent offshore.
But consumer group Choice says bricks-and-mortar retailers are failing to pass on the benefits of a strong Australian dollar.
“While consumers often see the benefit of a strong dollar when they shop online, they’re not seeing it in stores,” Choice spokeswoman Ingrid Just says.
Just admits some retailers are “hamstrung” by prices from importers and distributors.
“But ultimately, there needs to be greater efficiencies across the whole supply chain if the consumer is to benefit from the strong dollar, and indeed if the retailers are to compete with the online market,” she says.
While traditional retailers lament over the impact of the online market, shipping companies have told the Productivity Commission that lowering the threshold will hurt multiple industries.
The Conference of Asia-Pacific Carriers, made up of shipping companies DHL Express, TNT Australia, Federal Express Australia and UPS, has told the commission the current threshold is manageable for all parties, including shippers and government agencies.
It also argues lowering the threshold would result in lower efficiency in the Customs and Border Protection agencies, reduced speed of business, additional compliance costs for small business and disincentives for eCommerce.
“The range of stakeholders that would be disadvantaged by a reduction in the LVT includes the express carrier industry, the freight forwarding sector, transportation and logistics businesses,” the submission states.
“The end users of the supply chain, ie. business and consumers, would also suffer from reduced cashflow and an increase in administration and document recovery costs, which cumulatively would discourage trade and commerce.”
Online retail store eBay has also criticised the proposal to lower the threshold, claiming in its submission such a move would hurt “numerous stakeholders, from businesses to importers”.
“We believe that any moves to slow down the uptake of online retail would punish consumers, who would subsequently pay higher prices,” eBay wrote in its submission.