Productivity Commission recommends removal of online tax-free threshold

[TVR-190]

MORE goods bought overseas online could be hit by the GST after a recommendation to the Government today by the Productivity Commission.
At present goods worth under $1000 escape the taxes that would be levied on them were they bought from a shop in Australia, and retailers claim the difference is unfair.
The Productivity Commission believes that $1000 minimum should be reduced.
The commission, a major independent adviser to the Government, said online shopping would increase and Prime Minister Julia Gillard said shop keepers fighting that growth were line messenger boys wanting an end to telephones.
Ms Gillard said "great Australian companies'' retailers were adapting, and acknowledged there would be jobs lost in some areas but pointed to new employment opportunities.

"I think we've just got to remind ourselves the creation of the telephone certainly caused a change for the messenger boy industry,'' Ms Gillard said in Melbourne.
"I'm not sure too many people would want to go back.''
The total value of overseas online purchases is small, equal to about two per cent of total domestic retail sales or around $4.2 billion out of $215 billion a year.
Productivity Commissioner Paul Weickhardt said the GST exemption for small purchases was "only a minor contributing factor'' to the rapid growth of on-line purchases off-shore.
"Nonetheless, for reasons of tax neutrality, the level of the low value threshold should be reduced, but only once this can be done cost-effectively,'' he said.
The Productivity Commission said retail sector growth had been going down over the past 30 years as more people spent their money on things other than shopping - such as financial and real estate investments, travel and entertainment.
It said growth of on-line shopping was slower than the pace in other countries and represented an estimated six per cent of retail sales, of which four per cent was from Australian outlets.
Australia's 140,000 retailers employ 10.7 per cent of the national workforce but many outlets are complaining online shopping is forcing them to sack staff.
The Prime Minister pointed to an Access Economics report which this week said some 80,000 jobs could be produced by the increase in internet shopping.
"There are great Australian companies who are retailers who making the most of the internet to sell their products in a different way,'' said the Prime Minister.
"I think many people would be very familiar with how their favourite Australian retailer is changing the way they work and they can now go into the shop or they can make an order online.''
Communications Minister Stephen Conroy said the disruption to the general retail industry would increase , just as it had in other sales sections.
"It's disrupted the music industry, it's disrupted the movie industry, it's disrupted the book industry,'' said Senator Conroy.
"Car yards - it's disrupted the vehicle sales industry, the media themselves.
"It's a disruptive beginning and it's going to spread. But at the same time as it's disrupting some areas, new areas are coming through.''

This shits me. And apparently customs has cracked on big time to people ordering stuff and demanding to see receipts. I know when i bought a camera last year ( $350) they wanted proof that it actually cost that much and i wasnt trying to avoid GST.

Only reason they are doing this is because Gerry Harvey had a whinge about people getting wise to being ripped off by his stores.

[minux]

Meh, I dont care, a $500 puchase adds a whole $50. GST should of been included in all sales to Australia anyway. The problem is, Gerry Harvey thinks this will save his arse, it wont. I not long ago bought an 85 1.2 lens, Camera House etc wanted almost 4000. Imported it and after taxes cost me $2700. So much cheaper. This is how it is with almost everything, GST will never close the gap while the dollar is close/at/over parity with the USD. When the dollar drops back to normal levels, people will start buying in shops again as it is no longer a cheaper option to import.

[Stressball]

When I bought my 70-200 for "$1000 + $0 postage and handling" (damn chinglish speaking ebay sellers. 'Under $1000' does not mean '$1000') it got held up at customs, got the letter saying they wanted the forms n crap filled in, and that it would be something like $180 in taxes etc. Not sure how 10% became 18%, but meh. It turned up 2 days later without any input from me. I guess whoever worked the next shift decided that being right on $1000 wasn't counted in the threshold.

[ucwepn]

Its good that the retailers of Australia are squirming uncomfortably and screaming for help, it shows them that we are well aware of the massive markups and they can't hold us to ransom anymore in the internet age. Brick and mortar stores will be gone soon enough except for supermarkets and electronics lol

[wraith]

Electronics can be bought cheaper online (car stereos for example). Easy enough when they online stores can do a 5 dollar mark up and still come out in front. Amount of people that come in with a stereo and want me to install it then wonder why I charge them more then if they bought it through me.

[Dr HaxZaw]

I think it was david jones who posted a profit of $69 millions this year and then complained about the hard times... maybe if you were operating at a loss like some aussie companies they could complain yet thats all the media seems to want to talk about

[adamcawood]

a friend of mine nows jerry harvey and he is opening the biggest on line store in Australia shortly

[ClairBear]

a friend of mine nows jerry harvey

How do you now someone?

[Grennan]

a friend of mine nows jerry harvey and he is opening the biggest on line store in Australia shortly

Doesnt matter if he does. Prices will still be shit.

[elmaso]

Doesnt matter if he does. Prices will still be shit.

to true hahaha
seems to be we get proper ####ed on everything in Australia!

[wraith]

The online store will be too little to late. Besides he will have to still look after his brick and mortar places to so there's no way he can be as good as the other online only stores.

[hi_ryder]

cant remember the last time i bought something from here... even if the mob im buying from in the states dosent do international, shipping something to my mothers house (state side) and then having it shipped here is still cheaper... too many profiteers in this country. these companies mark stuff up %300 and wonder why everyone is buying overseas...

[CapriciousWL]

Remember that Mr. Harvey the magnificent role model and upstanding citizen admitted that the interest free deals were merely a ploy to get the people in lower socio-economic ranges to purchase expensive items they could not afford. He admitted there was no care if they could repay - that is the concern of the finance company who extends the money.

He is not alone in this - most retailers offer interest free deals. The benefit of Internet shopping is that it removes part of the spontaneous nature - unless you have credit available you shouldn't be in a position to buy. I know there are ways around it......

There is nothing you can do to make someone more intelligent or give them understanding of responsibility - just accept there are fools who will keep the economy flourishing and then complain when all their possessions are repossessed. People who prey on the financially challenged should be treated with contempt, they deliberately provide themselves with the best at the expense of those who can not afford it. Perhaps they could try to teach them to invest or save instead?

[Banicks]

As said previously, it won't make a difference.

Myer's and DJs and all them stores think that a 10% increase in the cost of an online purchase will stop us from shopping online. They obviously haven't added up things.

Camera in Myers = $550 including GST
Camera online = $200 + $20 P&H + $22 GST ($240 total)

Yea, that'll work. Not.