A major retail body is calling for action based on the findings of a report into parcel processing procedures, but the Federal Government and the Coalition continue to distance themselves from the issue.
According to a federal Treasury taskforce, it would cost up to $40 million to overhaul border processing systems before the goods and services tax could apply to online imports under $1,000.
Currently, the $1,000 GST-free import threshold means offshore retailers dodge the tax. Local retailers have argued this is unfair.
However, the taskforce found that if all online purchases were subject to GST, it would cost another $450 million in collection costs by 2014.
Imposing GST on imports over $500, instead of the existing $1,000 threshold, would cost about $11 million in handling costs.
The news comes on the back of NAB’s latest Online Retail Sales Index, which values online sales in Australia in the year to July at $11.7 billion.
Domestic retailers remain the dominant force in online sales. Their share sits at 72%, with the growth rate for domestic sales increasing by 24% year-on-year in July.
But the growth in international sales is also evident – the international index jumped to 237 points in July, compared with 201 points in June.
According to Russell Zimmerman, executive director of the Australian Retailers Association, the government needs to do something.
“The volume of parcels is going to increase… There are now good reasons for the government to look at this,” Zimmerman told SmartCompany.
“I think the government will be forced to do something about it. I don’t think they can sit back and wait… The volume in the parcel industry is increasing dramatically.”
While Zimmerman said the report does call for investment in customs and border control measures, the benefits of additional GST income would surely cover this within a short time.
But according to CHOICE, the “obsession” with reducing the tax-free threshold is distracting from the real reasons Australians are shopping online overseas.
“The idea that the 10% GST is the main factor pushing Australians away from local retail is absurd,” CHOICE head of campaigns Matt Levey said in a statement.
“We want a level playing field for Australian retailers, but we don’t support kneejerk calls to change GST rules without evidence that the benefits will outweigh the costs.”
“Our emphasis should be on improving the efficiency of parcel processing, collecting the GST cost-effectively and reducing the price divide faced by Australian consumers.”
Assistant Treasurer David Bradbury is remaining tight-lipped about the government’s intentions, simply stating the government is committed to ensuring a “strong and prosperous future” for the Australian retail industry.
Meanwhile, shadow small minister Bruce Billson said in a statement that while he’s yet to read the findings in full, he intends to investigate them fully, insisting this is not a “cut and dry issue”.
“The report is some 300 pages and involves some complexities in regards to flow on, administration and regulation,” Billson said.
Billson said the Coalition will continue to consult with the industry.