Consumer lobbyist Choice claims the argument that the GST low-value-threshold (LVT) is having an impact on Australian retailers is ‘based more on fiction than reality.’
Choice surveyed 1000 online shoppers and found only 12 percent nominated saving on ‘paying duties and taxes by purchasing on overseas websites’ as a reason for shopping online. But not all online shoppers purchase from overseas. While it’s not stated whether this is 12 percent of those who shop with offshore retailers, or 12 percent of the entire survey group, the anti-retailer tone of the press release leads to the assumption that Choice is twisting the figures to suit its argument.
‘We continue to hear that the GST low-value-threshold is wreaking havoc on the bricks and mortar retail industry, however the reality is that few consumers factor this into their decision to shop online,’ claimed Choice chief executive, Alan Kirkland (above right).
‘In fact 73 percent of online retail sales in Australia are made on Australian websites which do charge GST – so this is not a decisive issue for consumers.’
(Once again, Choice is being too tricky by half here. It’s not only bricks-and-mortar retailers only who are impacted by GST-free sales, but all Australian retailers, be they physical stores, online retailers or multi-channel.)
The survey found that ‘many Australians shop online to get the best bargain’ – without actually volunteering the actual figure behind the term ‘many’ – but ‘their main reasons actually relate more to convenience than price.’
‘The top reason Australians shop online is so they can shop at the hours that suit them, followed closely by the convenience of getting products delivered to their door.’
– Which is not an argument in favour of GST-free sales, but rather an argument in favour of online retailing.
Of consumers that are shopping overseas for better prices, most claimed they save much more than 10 percent – which Choice seems to imply means the 10 percent GST saving is somehow irrelevant.
‘Sixty-eight percent of consumers who buy from overseas websites to save money said they save more than 15 percent, while 43 percent said they save over 25 percent.’
– But if you add the GST onto those prices, that 68 percent would be saving between just 5 percent and 15 percent, which would considerably lessen the appeal of offshore purchases when weighed against the potential negatives: getting scammed; long delivery times; incompatibility with local standards; lack or warranty and overall Australian Consumer Law protection.
Choice said that last year Australians were paying around 50 percent more than US consumers for computer hardware, software, games and digital music
‘With these levels of savings available, it’s comical to suggest that a 10 percent GST is having a significant impact,’ Mr Kirkland asserted.
Choice said in its press release that it ‘supports a level playing field for Australian retailers, and believes the threshold should be lowered if it can be done cost-effectively and efficiently, without burdening consumers with massive fees, delays, and red tape, but if those criteria can’t be met ‘it’s just a deadweight loss to the economy, with the inefficient costs of collection – whether paid by government or directly by consumers – outweighing any benefits, and placing even more cost-of-living pressure on households.’
However, cost-of-living pressures are far greater when people in a household lose their jobs, as Solomon Lew noted in a recent article in The Age: ‘…the largest component of that [retail job losses] is by allowing consumers to buy online goods that we have to pay duty and tax for and that they don’t have to. We are the only western country in the world that allows that and it’s cost thousands of Australians their jobs and we would urge the new government to look at that quick haste.’
‘The retail sector is facing some real and significant challenges, but the low-value-threshold is simply not one of them,’ Mr Kirkland concluded in his press release.
The association representing retailers, the ARA, begs to differ: ‘The new Government has access to more than enough information on the issue to allow a quick decision on a reduction.
‘There really is no excuse not to fix the GST loophole; even the previous Government said it should be done and now is the time to reduce the collection amount from $1000 to international levels of around $20,’ ARA CEO Russell Zimmerman is quoted as saying in a recent press release.
(Photo Counter has gone back to Choice for clarification on some of its stated survey figures, but with no response to date.)
COMMENT: Lies, damned lies, and statistics! Choice is either being deliberately deceptive or just plain dumb in seeking to argue that increasing prices on offshore purchases by 10 percent will not have a positive impact on local retailers. The impact of price on demand is something one learns in the first term of high school economics.
Another dumb thing about Choice is that it seems to assume that because it represents Australian consumers, Australian retailers are the default enemy.