Why GST on imports under $1000 won’t make a scrap of difference

I really had to check the publication date of the story I was reading in The Sydney Morning Herald a few weeks ago.

Yet again, retail mogul Solomon Lew was urging the government to lower the $1000 threshold upon which GST can be charged to goods bought online from offshore retailers.

But no, it really was November 21, 2013 and not three years earlier.

With all due respect

When it comes to business nous, I’d be the last to question the billionaire. Clearly he understands the retail space a billion times better than most, including your correspondent.

But ‘digital’ is something he apparently is yet to get his head around.

For the umpteenth time, GST has nothing to do with Australia’s penchant for purchasing from offshore retailers.

The 10% saving if the GST were to be introduced won’t make a dent on the massive savings offshore retailers are offering compared to the locals.

But even that penchant is well overstated.

What offshore spending?

For the record, according to a recent NAB Online Retail report, almost three-quarters of the value of our online purchases remain right here in Australia. 

And according to the same report, month-on-month growth in local sales made online is outstripping offshore sales 2.7% to 2.5%.

What’s more, Australian retailers have the advantage of being able to ship faster and cheaper than overseas competitors. Not to mention that many Australians also like to support local business. And that we like to be able to call or visit the online retailer, etc.

Even consumer bible Choice has discredited the big retailers’ campaign, citing a measly 12% of Australian online shoppers buying from offshore retailers to save on duties and taxes.

What’s the true motivation?

With so much evidence and informed opinion stressing that the threshold change won’t make a scrap of difference to the volume of offshore online shopping, why are Lew and co spending so much of their valuable time lobbying for this change?

Obviously that’s something only they can answer. 

One could argue that these heavy-hitters simply don’t like to play on a perceived unlevel playing field.

But I suspect it’s yet another attempt by traditional players to try and thwart the tidal wave of change the online world is creating, or perhaps even buy some time while they try and play digital catch-up.

This is a battle many have attempted but few have won. Just ask Kodak, music retailers, record companies, Borders, traditional publishers, etc.

Surely Mr Lew, your time is better spent learning how to tap the rich vein that is the online world rather than waste yet more valuable time fighting it?

The E Team assists smaller businesses with the gamut of their online requirements from world class websites to assistance with web marketing strategies. Please contact us to find out more.