The Australian Traders Group (ATG), which numbers both PMA and IDEA as members, is calling on both sides of politics to commit to reducing the Low Value Import Threshold (LVIT) from the current $1000 limit immediately after the federal election in September.
Spokesperson for the group, Australian Retailers Association (ARA) executive director, Russell Zimmerman, said the continued delays in reducing the threshold are impacting jobs and state government revenue.
Reducing the threshold will be electorally unpopular, so it’s more likely a government will have the courage to do so early in its tenure – as far as possible from the next election
‘The Government has delayed a final decision on LVIT to after the September 14 election with the final Customs and Australia Post business cases not expected until that date,’ Zimmerman said.
‘Industry groups are calling for whoever is in Government to make the decision as soon as the costing reports are handed to them by the end of September.’
While the new government – be it Labor or Coalition – may quickly flag changes to the threshold, it’s unlikely that any change can come into effect until the new financial year commencing July, 2014. Even if the government was keen to act, Customs and Australia Post can’t be expected to implement changes in the middle of their budget year.
The ATG says it supports NSW treasurer, Mike Baird, and Victorian treasurer, Michael O’Brien, in their calls for the LVIT issue to be fixed in the face of falling GST revenue and struggling service delivery in the states, along with struggling local retail sectors.
The group says that if a reduction to $20 in the threshold from the current $1000 collection rate begins as soon as the election is over, anywhere from $500,000 to $1 billion in GST could be collected in the 2014-15 financial year, rapidly growing to well over $1 billion in the following few years.
‘The ATG acknowledges the costs for collecting GST on overseas good is significant, but with the work currently being undertaken by Customs and Australia Post to reduce those costs, we are certain state governments will be in a position to meet those costs, as they will benefit from the extra revenue,’ Zimmerman said.
However ‘being in position to meet costs’ and actually meeting them are not the same, and the politics of the matter are complex: The Federal Government has to make an unpopular decision while deriving no direct benefit, as the GST revenues go to the states. The corporatised Australia Post and the Federal Government’s Customs will incur costs without deriving any business or efficiency benefit. The ATG’s suggestion that the states – the ultimate beneficiaries of the increased GST revenues – will agree among each other to pick up Customs’ and Australia Post’s costs seems optimistic.
ATG represents 11 retail industry associations, including the Photo Marketing Association, Imaging and Digital Entertainment Association, Australian Retailers Association, Australian Booksellers Association, Bicycle Industries Australia, Australian Music Association, Retail Cycle Traders Australia (Inc), Australian Toy Association, Australian Sporting Goods Association, Franchise Council of Australia, and Snowsports Industries of Australia.
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