CHOICE says consumers could face 250% price hikes on overseas purchases as retailers again push for loss-making tax
Consumer advocacy group CHOICE has warned the Federal Government risks slugging consumers with massive mark-ups on overseas purchases if it bows to pressure from the local retail industry to reduce the GST low-value threshold on overseas goods.
In its submission to the Federal Government’s Tax Discussion Paper, CHOICE has crunched the numbers on the potential price impacts of reducing or abolishing the current GST low value threshold of $1,000.
“We’ve found that collection and processing fees could add costs of up to 256% for purchases under $100, turning a $20 book from an overseas online store into a $72 book,” says CHOICE Director of Campaigns & Communications Matt Levey.
“That’s using estimates from the Productivity Commission, who in 2011 said average collection costs as low as $50 a parcel were based on ‘highly favourable assumptions’.”[1]
CHOICE says the most important factor in any debate about new internet taxes is making sure it raises net revenue. Otherwise it will simply increase cost-of-living for no overall economic gain.
“We’ve looked at all the available evidence for reducing the current threshold and it just doesn’t stack up,” Mr Levey says.
“Shifting the costs of collecting GST from governments to consumers does not make the costs disappear. It does not benefit the Australian community. It just reduces competition and hits household budgets.”
CHOICE supports the Federal Government’s intention to create a fair tax system but says the most important consideration should be the economic integrity of any changes.
“Retail groups are now talking about a ‘modern approach’ to the internet tax which ‘defers costs from government’.[2] This is basically code for ‘make consumers pay’,” Mr Levey says.
“We know the two main reasons Australians shop online are convenience and access to a greater range of goods and services. Pretending they are doing this to avoid a 10% tax is ridiculous, although if it becomes a 256% increase then it will clearly put people off.”
CHOICE’s submission to the Federal Government’s Tax Discussion Paper provides a review of available evidence for reducing or abolishing the GST low value threshold.
About CHOICE
Set up by consumers for consumers, CHOICE is the consumer advocate that provides Australians with information and advice, free from commercial bias. As vital today as when we were founded in 1959, CHOICE continues to fight for consumers and uncover the truth. By mobilising Australia’s largest and loudest consumer movement, CHOICE fights to hold industry and government accountable and achieve real change on the issues that matter most.