Productivity Commission set to release draft report on retail industry this afternoon, but retailers not hopeful of change to GST threshold

The Productivity Commission is set to hand down its draft report this afternoon into the retail industry and the possibility of amending the GST-free import threshold, but advocates for taxing online sales aren’t necessarily expecting a victory.

Brad Kitschke from the Fair Imports Alliance says while it believes lowering the threshold “is the only thing they can do”, the Productivity Commission may be unable to recommend such a measure.

This comes after six months of comments from Assistant Treasurer Bill Shorten, who has previously accused retailers of exaggerating claims that the GST threshold has hurt their Christmas sales. Tax experts have also expressed doubt that such a recommendation would be positive for revenue overall.

“We’re hopeful that there will be a recommendation for the threshold to be dropped. But obviously, the sticking point will be whether the border and protection services can be efficient enough to administer that lower threshold,” Kitschke says.

Kitschke and the FIA have previously argued that the border services aren’t effectively monitoring packages, and are missing out on potentially hundreds of millions in revenue. This contrasts with comments from the Government, which has said that the cost of administrating the lower threshold would exceed the increased revenue.

“That is our concern, that this is an extremely inefficient agency and that there has been any lack of drive from the Government about this.”

A report from the Customs office earlier this year said the Government may be missing out on $100 million in revenue, but Kitschke argues that may be closer to $460 million. He points to Productivity Commission figures which indicate there may be more revenue to be found.

Kitschke’s comments have been matched this week by those from the Shop, Distributive and Allied Employees Association, which has told the Australian Financial Review that it supports a reduction in the threshold.

“Such an action could well increase administrative costs for government but that is not a reason to do nothing,” the union has said in a submission. “The Government does have a responsibility to ensure that Australian retailers are not forced to compete on an unfair or uneven basis with overseas sellers.”

Kitschke says while businesses are doing the right thing by opening online stores, the Government still needs to deliver.

“We’ve never been opposed to online trade, it’s what customers want, and what should be delivered. It’s tax neutral and fair.”

The Productivity Commission is set to release the draft at 1pm. SmartCompany will report on its findings at that time.