At a meeting in Canberra yesterday, the state and federal treasurers put off making a decision on the rate at which the LVT will apply, but appear to have agreed to reduce the threshold from $1000.
They have agreed to make a final decision in March.
According to a report in the Financial Review, the treasurers were presented with four options, one of which was to phase in a lower LVT, starting with a $500 rate.
State treasurers were keen to move directly to a lower level, according to the Fin Review, avoiding high collection costs by having it collected at point of sale. Though this wouldn’t be welcomed by international e-tailers and shippers, it would be most efficient (as a related transaction is taking place already), and reflect the Australian system for collecting GST via retailers.
One option which is beginning to take shape is a two-tier system, with retailers encouraged to co-operate in collecting the GST at time of purchase. Goods purchased from participating companies would be delivered direct to customers, while goods purchased from non-participating retailers would need to be warehoused, inspected and processed, adding extra cost and delays for the customer.
With GST collection at point of sale, the cost per item could be as low as $4.50, according to the National Retailers Association (NRA).
A report by Ernst & Young for the NRA said that after start-up costs for the government of around $100 million, extra GST revenue could amount to $1 billion, with ongoing government costs at around $30 million per year.