RETAILERS WARN ONLINE TAX WILL HURT SHOPPERS
Written on the 4 May 2012
QUEENSLAND retailers warn the Gillard Government’s proposed new tax on goods purchased online from overseas is senseless and self-destructive.
West End-based online camping store Globe Trekker fails to see how Federal Labor’s draft amendments to the Goods and Services Tax (GST) will ‘make a bean of difference’.
“It would be stupid as it would cost more to physically charge the 10 per cent on goods worth less than $1000, considering the cost of opening, inspecting and sealing parcels,” says owner Brett Williams.
“Some sellers in places like China falsely declare the item is worth as little as 30 cents instead of hundreds of dollars.”
Williams reveals most online shoppers choose offshore sellers for substantial savings of 50 per cent or more. Charging 10 per cent GST would still leave many buyers with savings of at least 40 per cent.
Williams believes the rising number of Australian retailers entering receivership is because of crippling offshore prices.
“A lot of importers are putting pressure on international manufacturers to reduce their buy-price, which makes products dearer in Australia than the US or European Union,” he says.
“Last year we sold a water filtration device for $199, but in the US the same product was $99. We have pressured importers so we can retail it for $99 in Australia, keeping money in the country.”
He believes the price difference reflects Australia’s higher wages and commercial rent fees.
“When I visited Salt Lake City, I discovered our hourly labour rates ($20) were more than four times higher than theirs ($4.50),” he says.
“Our former Albert Street location in the CBD cost me $32,000 a month, while a similar site in Salt Lake City cost $35,000 a year.”
The government plans to use debit and credit card information to tax off-shore goods and services suppliers. However, East Brisbane-based import consultancy ChinaDirect Sourcing Services believes many sellers will simply pass the buck to consumers.
“It will place a lot of restrictions on Australian business, because it will automatically cause the seller not to absorb the GST cost, so it will be passed to the consumer who will suffer,” says managing director Lindy Chen.
“Manufacturing is a global game and putting a barrier and protecting Australian jobs is a limited view. The government should be more considerate of SMEs as they are the blood of society and provide the majority of employment opportunities. If SMEs suffer, the whole society will suffer too.”
The Australian National Retail Association, on the other hand, has welcomed the draft GST amendments.
“Federal Treasury calculates goods purchased online from overseas represent $630 million in forgone GST revenue. Parcel traffic in the past four years grew an estimated 104 per cent,” says chief executive Margy Osmond.
“We are very pleased with what has come out of the GST distribution review.”
A government-appointed inquiry panel will release its final report on the proposed tax changes before the end of the year.