Top Menu

The GST debate: ‘fairer tax system’ or ‘needlessly difficult’?

 

ADVERTISEMENT

The federal government’s plan to collect GST on goods worth less than $1,000 bought by Australian consumers from overseas retailers has stirred up debate this week.

While major local retailers and the Australian Retailers Association (ARA) have long lobbied the government to close the Low Value Threshold (LVT), international retailers including Alibaba, eBay and Etsy have come out fighting.

The proposed changes will come into effect from 1 July this year. In the bill’s current form, overseas retailers with an annual turnover of $75,000 or more will be required to register with the ATO to collect GST on all goods sold, including purchases under $1,000.

Here’s what key players have to say.

The government: ‘fairer tax system’               

The law is part of the government’s commitment to creating a “fairer tax system, supporting our small businesses and creating a level playing field for Australian businesses,” said Treasurer Scott Morrison.

ADVERTISEMENT

ADVERTISEMENT

“These changes are about ensuring that Australian businesses, particularly small retailers, do not continue to be unfairly disadvantaged by the current GST exemption that applies to imports of low-value goods…

“With the continued growth and normalisation of cross-border shopping, we cannot afford to simply ignore the impact of these outdated arrangements on the tax system…

“We now live in a world where online cross-border shopping is a normal and often daily activity for many Australians. This reform to Australia’s GST is a significant world first, but it is consistent with the direction of international tax policy in this area.”

The ARA: ‘creates a level playing field’

In a statement, the Australian Retailers Association (ARA) executive director, Russell Zimmerman, said the organisation “strongly supports” the new law.

“This is a tax equity issue and internationally-based retailers should pay their fair share of tax,” he said.

“Retailers conducting business in Australia should pay their tax just like Australian retailers currently do…

“This new legislation will create a fairer tax system for Australian retailers by creating a level playing field against international competitors.”

eBay: ‘prevent Australians from buying’

eBay’s vice president and managing director for Australia and New Zealand, Jooman Park, has come out against the proposed changes, going so far as to suggest the online marketplace may geo-block Australian consumers if the bill goes through in its current form

“Regrettably, the government’s legislation may force eBay to prevent Australians from buying from foreign sellers,” he wrote in a submission to a senate inquiry.

“No tax would be paid to Australia and none would be owed. It would raise no revenue, deny Australians access to choice and lessen price competition. This solution would not even represent a win for bricks and mortar retailers, because Australians would still find ways to buy online.”

Amazon: ‘administrative burden’

In its Senate submission, Amazon stated it “supports the reduction of the GST threshold on low value imported goods to zero, subjecting imported goods to GST to level the playing field”.

However, it does not support the proposed collection model—where sellers have the responsibility for collecting and remitting GST—and said the bill “fails to level the playing field between Australian businesses and offshore suppliers.

“The bill imposes an administrative burden on sellers and electronic distribution platforms which will create an inherent disincentive for them to comply”.

The company suggested there is a “far better alternative” to the proposed changes. It believes a logistics model would be more effective than the proposed vendor model as “logistics providers already have infrastructure in place to collect information on goods coming into Australia, and have well-established processes for GST collection for goods valued at more than $1,000”.

ASOS: ‘needlessly difficult’

In ASOS’ submission to the enquiry, Head of Trading AU and NZ, Carly Cazzolli, said the fashion retailer has “a number of concerns” about the changes.

“We are concerned that if complexity and uncertainty are not avoided, then compliance will be needlessly difficult which could have a negative impact on both the success of the legislation and the Australian consumer,” she wrote.

Cazzolli also expressed concern about the timeline, writing that there is “too little time between the finalisation of the legislation and the proposed commencement date”.

“It seems likely that the new legislation will not be finalised and enacted until May at the earliest, this only leaves one month to implement and test any required changes to both retailers’ systems and those of any third parties involved in the supply chain.”

Disrupt Sports: ‘anti small business’

Gary Elphic, CEO of local ecommerce retailer Disrupt Sports, wrote that the changes are “anti online small business, anti free trade and anti consumer”.

“This GST bill runs counter to everything I stand for as an Australian small business, it encourages reciprocal action by other governments, which will make small business exports less competitive.”

Choice: ‘extremely concerned’

Consumer advocacy group Choice has expressed concerns that the “bill would not lead to fair or simple outcomes”.

Choice acting director of content, campaigns and communications, Erin Turner, said there is still a lot about the new tax that is unknown.

“[We are] extremely concerned that the proposed change to the GST LVT will lead to additional costs to Australian consumers, on top of the GST collected,” she said.

“It is also likely that the cost of administering the scheme will be greater than revenue raised.

“The Treasury has not released any modelling on the impact of the proposed LVT changes. They have only provided the revenue expected to be raised across the first three years with no detail on collection costs or the impact of the measures on businesses, consumers or the wider economy.”

In other news…

Amazon has finally put an end to the speculation by confirming its arrival in Australia. Read what a local retailer has to say about the news here.

A new report into the fashion industry has been released, with only one company able to prove they were paying workers a living wage. Get that story here.

We also spoke to shopping guru Kathy Sheeran, who gave us a few tips on creating a loyalty program customers actually want to use.

Looking for inspiration? Head right over to our story on seven must-visit stores in Melbourne. These small businesses know how to do retail right.

Finally, our contributor this week is Daniel Littlepage, who shares three reasons why you need to invest in shoppable video. There’s also a pretty cool example of what he’s talking about, so click here to check it out.

 

Want the latest retail news delivered straight to your inbox? Click here to sign up to the retailbiz newsletter.

, , , , , , , , , , , , ,