Support grows among retailers and unions for online sales GST charge

Support is growing among retail groups over the possibility of introducing a tax for online sales, with one of the country’s largest unions pledging its support in its submission to the Productivity Commission inquiry into the GST-free state of online purchases made by Australians from overseas merchants under $1,000.

In its submission, the Shop, Distributive & Allied Employees’ Association – which counts over 230,000 members – argues that while imposing a tax for online sales won’t stop the trend of online shopping, it will nevertheless “level the playing field”.

“We acknowledge that this would not necessarily remove all adverse factors for Australian retailers seeking to compete in the global market, but it would significantly even up the playing field,” the union said.

Fair Imports Alliance spokesman Brad Kitschke says the support shows there’s a growing number of retailers who are now calling for such a tax.

“It’s been our view for quite a period of time the Government needs to review the low value threshold, and that the value at the current rate is having a detrimental effect in retail. We’re glad one of the largest unions has come out in support of such a move.”

The union says there are a number of factors involved in the fall of online sales, including the impact of the financial crisis, a trend towards saving money and increasingly high housing costs. However, it also points out that none of these suggest any fundamental weakness in the industry.

And it also says there has been a clear expansion into online shopping, with consumers choosing to purchase cheaper goods.

“There is a trend and the current system encourages this trend by allowing goods to be purchased from overseas sources without a GST being applied, while all goods purchased within Australia do have a GST applied.”

It clearly states – “the Government should impose a GST on all overseas purchases”.

This is the same proposal given by Council of Small Businesses of Australia chief executive, Peter Strong, who says all digital sales need to have a GST imposed upon them.

The Government has addressed such a notion, with assistant treasurer Bill Shorten saying the money needed to implement such a scheme wouldn’t be worth the cost. But the union says this is “not a reason to do nothing”, and argues the tax is about “equity and fairness”.

The submission comes alongside one from Colin Scott, director of the Australian Toy Association and vice president of the Australian Retailers Association, who says retailers are facing impediments due to the high import threshold of $1,000.

Retailers including Myer chief executive Bernie Brookes and Harvey Norman chief executive Gerry Harvey have been calling for the move to a GST tax on internet sales for some time, but have relaxed their campaign after negative backlash from shoppers.

But it now appears the idea is being given support by retailers.

Additionally, the Fair Imports Alliance released a statement last week saying Customs had admitted that it had not “undertaken analysis of which threshold level will be administratively feasible”

As a result, Kitschke says previous government decisions to keep the threshold at $1,000 were made without any basis.

“We’re concerned that Government decisions have been made without any evidence to support it, there seems to be a large amount of potential revenue here and it seems it could be collected in an efficient way.”

The Fair Imports Alliance also argues the revenue that could be collected from such a scheme is as high as $700 million, far outweighing the cost of collecting it.

“It is staggering to think a Government agency like Customs cannot implement an efficient system to collect this revenue and even more impossible to understand how it advised the Government that something is not economically feasible to undertake, when they have never carried out any modelling to prove so.” It argues.

The Productivity Commission report is due in November.