GST changes parked until 2014

Any action on reducing the threshold on GST imports has been put off until the 2014-15 financial year at the earliest, given deadlines set by the Federal Government.

Solomon Lew: '...hard to compete when your own government is on the side of foreign competitors.'

Solomon Lew: ‘…very hard to compete when your own government is on the side of foreign competitors.’

The Treasurers of NSW and South Australia will lead a working group to examine changes to the taxing of goods bought online with an aim to have recommendations in by the end of next year.

Another group from the Treasury will ‘examine business cases’ related to any change.

This is in addition to the three extensive reports on the issue – from the Productivity Commission, a special Low Value Parcel Processing Taskforce put together by Federal Treasury, and the GST Review Panel. Each of these conceded that the system was inequitable and needed to be changed.

With only ‘recommendations’ due by the end of next year, an optimistic estimate for implementation of any changes would be July 1 2014, and more probably July 1, 2015, unless the government has a change of heart, or a new government sees in new policies on GST on imported goods.

The only firm move so far beyond the establishment of taskforces and panels is an expressed intention to introduce legislation separating the threshold for customs duty from the threshold for GST, allowing the threshold for GST to be lowered in the future if needed.

The federal government has chosen to disregard the advice of the GST Review Panel, and data in the LVPPT group report, that the threshold could be reduced to $500 immediately with a net benefit to publiccoffers after handling costs are factored in.

While (except for consumer advocacy group Choice) almost everyone familiar with the issues now concedes that the current threshold is unfair and a burden on the local retailing industry, the issue has been effectively buried until after the Federal election.

Leading retailers Solomon Lew (Just Jeans et al) and Paul McClintock, (Myer chairman) have both come out strongly during the week in support of lowering the threshold immediately.

At the AGM of his Premier Investments group Mr Lew cited the collapse of retailers including Borders, Colorado, Brown Sugar and Fletcher Jones and labour force figures showing that 22,600 jobs had been lost in the retail sector over the past 18 months as evidence the government needed to act quickly.

“In the face of the overwhelming evidence of the damage being done to Australia by this policy, and the independent assessments of several highly-credible reviewers, yesterday the Federal government announced they needed more time to assess the impact of changing its current low-value threshold policy,’ he said.

‘My message to the government is that we have all run out of time. Change needs to be made right now, and if the government needs any further proof of what’s at stake, I have one word for them – jobs.

‘It is very hard to compete when your own government is on the side of foreign competitors.’

Mr McClintock was a little more moderate at the Myer annual shareholder meeting: ‘As a company, we are still frustrated by the duty and GST loophole that exists that provides overseas online retailers with an advantage over local retailers. The internet has broken down traditional trade barriers and it is critical that reforms keep pace to ensure our local businesses are competitive,” he said.

‘It’s tremendously important for state governments as well as our industry that the  government moves effectively and quickly to close the loophole, it really is incredibly unfair to have a situation where people can do exactly the same transaction in different ways and have different tax consequences.”

A report by Ernst and Young commissioned by National Retailers Association found that a continuation of the $1000 GST threshold could cost NSW $752.9 million in lost revenue between 2012-13 and 2014-15.

The report also found that up to 33,400 local retail jobs Australia wide could be lost, along with associated income tax, payroll tax and other revenue, if this slice of the domestic economy moves overseas.

A reading of the Government’s foot-dragging Interim Response to the Low Value Parcel Processing Taskforce Report is both illuminating and depressing. (In four words: ‘It’s all too hard.’)

Alternatively, this one-sentence summary gives a sense of the government’s urgency in addressing the issue: ‘The Government will examine ways of improving the efficiency of low value parcel processing, with a view to potentially reducing the low value threshold for GST in the future.’

– That is, don’t hold your breath!

 


5 thoughts on “GST changes parked until 2014

  1. Get Gillard out of there before we become a third world country, last year she let $9Billion of GST flow through Un-Paid coz she was to busy Carbon Taxing Pensioners Power Bills, In Brazil nothing goes past customs without 100% of value added tax , that’s why Brazil is advancing so much and we are going backwards Fast !!

  2. What a complete surprise, we keep telling the Government to charge GST to low volume imports and they are reluctant to anger everyone outside retail by doing it. The punters don’t want to pay more tax!

    I suggest a new strategy for the Australian retail sector.

    1. In order to protect Australian retail jobs, we demand nothing more and nothing less than equal and fair treatment by the government. To this end we demand exemption of GST for retail sales up to the same value as overseas purchases enjoy (whatever that may be at the time).

    2. We further demand that any Australian standards not enforced on overseas purchased goods at point of entry, should no longer be a mandatory requirement for goods sold in Australia, as this is an unfair cost burden on Australian importers and further threatens job opportunities in this country by driving up the retail price in Australia.

    3. We finally demand that Australian consumer law can not mandate rights and benefits to consumers above and beyond the manufacturers warranty terms as these costs are not incurred by overseas retailers we have to compete against.

    In this new internet environment of free and open trade, the government can no longer treat the Australian market as isolated from the rest of the world. Unless at the point of entry they vigorously enforce safety standards, consumer protections and GST, it is not only unfair to local business but will have an ever increasing impact on jobs and the overall economy.

    We must take this fight to the government now.

  3. Always the same old story
    Guys like Solomon Lew and Harvey Norman
    Screwing the small guy,complaining about GST
    But in the mean time they rolling in the bucks.
    Hands Off Please Import 1000 Dollar free GST
    It’s the consumer who makes the choice
    Wake up retail Australia the party is over
    It’s a consumers paradise,it’s the consumer who makes
    the decision where he/she purchases the goods from.

  4. I have watched Australia being transformed into a third world country over the past 42 years we need to lobby our politicians harded to return our country to being the lucky one.
    A level trading platform is needed go back to tariffs and change the GST to a sales tax no more free areas. Maybe fewer politicians pay reviews.
    Ron Frank

Leave a Reply

Your email address will not be published. Required fields are marked *

Recent Related Posts