Retailers blame GST “trapdoor” for bike chain brake down

The Australian Retailers Association has blamed the collapse last week of BSC Bikes on GST-free imports for low value items.

This weekend BSC Bikes’ three Melbourne stores were all closed with a sign on the door of the Brunswick Street store announcing the closure and giving a number for customers with laybys to contact.

BSC Bikes had plans to open a fourth store on July 2, but unexpectedly shut its doors on Tuesday night, costing between 25 and 30 jobs.

In a letter sent to state premiers and treasurers last week, the ARA called on the Federal Government as well as state premiers and treasurers to reduce the low value import threshold (LVT) and claimed $1.73 billion in revenue was lost as a result of the threshold.

“The sudden collapse of bicycle retailer BSC Bikes could have been prevented given a more equitable trading environment,” ARA president Russell Zimmerman said in the letter.

“Action needs to be taken to reduce a threshold which not only poses an inherent competitive disadvantage to Australian retailers, but is also a hidden GST trapdoor for states.

“The reality is all Australian retailers – whether they’re operating online stores, physical stores or both – are unable to compete on price or innovation with overseas retailers marketing products to Australian consumers.”

The letter cited research which showed the majority of Australian consumers would rather buy Australian, even when shopping online.

“Australian retailers cannot respond to this consumer demand if they’re competing with overseas retailers who are able to dodge tax,” Zimmerman said.

The owner of BSC Bikes, Peter Hess, also blamed the store’s collapse on “unfair” competition from internet outlets.

Hess called for a special levy on internet retailers to level the playing field with local shops.

”Retailers in Australia are generally being portrayed as rip-off merchants because our prices are higher than the internet,” Hess told Fairfax.

“But we base our prices on our local wholesale costs and our local rental costs.”

”The solution for that, in my eyes, is not only add GST to online purchases, but add an extra internet levy to even up the prices and enable the local market to compete with the net.”

The executive director of the Australian Sporting Goods Association, Shannon Walker, told SmartCompany the LVT was an issue for all sports retailers.

“Online retail is here to stay and companies need to come to terms with that in their own way but certainly the LVT threshold is hurting local retail,” he says.

“The chief executive of BSC Bikes mentioned it as one of the issues leading to the store’s collapse.

“The government has put in place a process to look at the LVT and we are engaging with them through that process. In the meantime, we are telling our members about finding opportunities in the online space.”