New customs levy on overseas shopping

The proposed introduction of a $5 levy on imported parcels worth less than $1000, combined with the GST to be imposed from July 1, should combine to make the local alternative more attractive to online shoppers.

A leaked Department of Home Affairs discussion paper, obtained by Fairfax, shows that the Federal government is considering how to cover rising costs of bio-security, as Australians receive more parcels from overseas.

The paper explains that the number of overseas parcels has increased by 22 percent – to 38.7 million units last financial year – effectively blowing out the government budget to manage trade border activities for low-cost goods. The new levy should bring in an extra $200 million for the Australian Treasury.

‘As the volume of imported low value consignments continues to grow, so too do the costs of biosecurity, cargo and trade border activities for those consignments,’ the February 2018 paper, published by Fairfax, says. ‘This has created increasing inequity and cross-subsidisation, where importers of high value consignments are paying for the border activities attributable to other users. Existing cost recovery arrangements are no longer sustainable and will not support Australia’s future trading environment.’

Apparently, purchases worth less than $1000 represent over 90 percent of deliveries entering the country.

While it was suggested that freight and express couriers would be hit by the tax, Freight and Trade Alliance director Paul Zala told Fairfax consumers would foot the bill.

‘We expect the cost of the levy per parcel to be in the dollars not the cents,’ he said.

According to Fairfax, this idea has been in the pipeline for four years – but has recently resurfaced in time for the May budget.

The new tax, along with the GST enforced on overseas retailers from July, may benefit local retailers as the sudden rise in costs for international goods will encourage buyers to shop local.

Obviously a $5 increase will hit harder for cheaper goods – shipments that cost closer to $10 than $1000.

For example, a 3-pack of Kodak 35mm 200 Colour Negative Film from B&H currently costs US$8.39, plus US$13.26 shipping. A total of US$21.65 or $27.

The film is cheaper in the US than Australia, but shipping costs already make the 3-pack more expensive from B&H.

The new taxes would make the cost roughly US$27.50 or $35 – around a 30 percent price rise.

Meanwhile, 3-packs of Kodak 35mm film cost between $20 and $25 in Australia.