Australia’s Productivity Commission has released its report into the Australian retail industry, and finds that while this country’s 10% goods and service tax should apply to low-value international purchases made over the Internet, collection would be too expensive. Since the Australian dollar began appreciating in value, …
Richard Chirgwin - you're my hero
I get more objective reporting from the daily articles by Richard here then I do from the rest of the internet combined. I know, I know, Richard is just presenting boring facts rather and honest assessment rather than searching for the most titillating angle and speculating about it endlessly. He even has the temerity to include to include links to back up his claims. Since when has any serious money making journalist even done that?
It can't possibly last. I am making a point of enjoying it while it is around.
It's just gouging
I did do research in the local stores for my most recent online purchase over $500 and there was no way anyone could match it locally and for no real reason I could see as I would be happy for them to have at least $200 profit, but they had to be greedy and charge $500 more than I could get the same item overseas.
At the moment with the Australian dollar worth more than the US dollar the prices listed on their sites are even cheaper than they look.
Yes there has been a lot more saving, myself included, I don't want to rush out and spend it on rubbish as I don't know what the economic situation is going to be in the future.
The Autodesk tax for Australians is significantly worse - 50%
Autodesk's online store slogs Australians with a 50% markup over the US pricing.
For example, Autodesk Designer 2012 for OSX:
• Price for "Americas" region customers : US$495.00
• Price for "Australia" region customers : AU$750.00
(equivalent to about $US780)
Same store, same base URL, everything. "Region" selected is changed, that's all.
50% markup. Check for yourself:
The payment part is region locked. If you have an Australian credit card, you're forced to use the Australian pricing. Choose the US one and it doesn't go through. (tried that)
Maybe Australians are not cheapskates but more likely sick of being ripped off. A good example is Lego which is often less than half the price in the US. If you go to the official Lego web site and you can choose what country you are in. Switch between US and Australia and you will see it's still the same website but with very different prices.
This is why we buy from overseas.
"El Reg has argued that geographic price discrimination, along with the granting of “exclusive” distribution rights and retail arrangements designed to keep prices under vendors’ control amount to resale price maintenance – a practice which, although illegal, appears endemic in markets such as IT."
I would argue that Apple is in the minority in being both the international vendor and the local exclusive distributor. The issue in Australia, in my opinion, is the exclusive distribution channel bullshit. I like my photography kit and there are some items - filters, storage devices etc - that are ridiculously priced here because of the exclusive distribution arrangement. In fact to the extent where I can and have imported at least two of said item (£60-100 unit cost) from the UK for around the same price as one here. It has to be the Government that puts a stop to this sole distribution crap because the international companies never will. Retailers generally are powerless as they have to margin on top of what the distributor dictates. It is this arrangement that has seen prices stay fixed even as the AUD hit US$1.10.
Wholesalers are just one part of the problem
Even if retailers wise-up and bypass the local wholesalers - and buy stock directly from foreign discounters - they still face a problem of paying for the overheads associated with a shopfront and staff.
One outcome will be that goods that can be easily sold over the Internet and safely delivered should cease to be sold in streetfront retail stores - exactly as iTunes and Amazon have killed CD and DVD stores, with bookshops to follow.
The only retail areas that are somewhat safer are those where the buyer really needs to inspect/try the goods (fresh food) or it must be tailored to suit the customer in some way (men's suits) or service industries like fast food, dentistry etc.
The ugly consequences of Paul Keating's 'level playing field' are finally happening. It was a fantasy and it will slowly lead to the destruction of the incomes and quality of life of ordinary people in many industries - starting with retail - the result being to drive their income and conditions of employment to parity with China and India.
The only real long term solution is a hefty import duty levied on all sales overseas at the point of sale - ie collected via the credit card or bank handling the transaction - where the transaction can be traced offshore - and the level of duty should vary according to the country of origin. This spares customs form the ugly task of opening parcels and the paperwork to collect minuscule amounts of tax on the majority of items - and it will also collect tax on items delivered electronically such as music, video/movies, and software and e-books.
Then our own foreign customers' countries will be at equal liberty to tax our exports to similar degree. Good-by mining, forestry, agricultural sectors, then!
Your long term solution is ... not to put to fine a point on it ... unworkable.
Not only would all the credit card providers need to agree to collect tax on behalf of the Australian government, if it succeeded, every government would end up wanting their cut.
Furthermore, what tax rate should be paid and to whom, if the goods are bought from a UK store by an Australian CC in Australia and sent to a UK recipient? Does your answer change if the Aus CC is used in the UK? What about a UK CC being used in Australia on holidays to purchase and send the same goods?
What tax rates does Visa collect from an Australian shopping in the UK using a US Internet proxy for delivery to Germany, for a person on holiday from Brazil? As you can see the possibilities, and associated complexity, are endless.
Finally ... while I have the utmost respect for people who work retail (having done so myself years ago), people have no right to a specific job. And ignoring the direct financial aspects of it for a moment and dealing only with the underlying morals, why does a person in your own country deserve a high paying job more than a person in China deserves a lower paying job? Citizens of AU (and I suspect most 1st world countries) can get support when out of work - perhaps not so for others.
Regional price variations
Regional price variations (and release scheduling) are killers of sales.
However I can understand why in Australia that the margin needs to be higher than the exchange rate alone: industrial relations and other business regulation. The cost of doing business here in Australia is SO MUCH higher than in the US that it is literally cheaper for 1000 consumers to import themselves (and pay relatively high single unit pricing/shipping) than for a subsidiary to open up shop and hire staff and import 1000 things (at transfer pricing) and ship locally.
I believe that the productivity commission report also addresses this. But since the last government that attempted IR reform was voted out wholesale, no politician is going to address this for several decades. If ever.
I propose opening an 'apple store' / 'argos' concept store with nice shiny computers/display gadgets to use and some helpful staff to show consumers how to order via amazon etc. Optionally (for a small fee) you can have the goods delivered to the store to pick up rather than have it delivered to your home. Maybe there is a fee to use the computer, or a fee to use the 'checkout' (some proxy on https should catch most credit card entry screens).
My point is - if all that local shops are doing is importing overseas stuff and reselling it, there is little value to the consumer in truly shopping locally. What makes me want to shop locally (wherever I am) are: things that I want/need that are uniquely available only 'here'. Would it shock a clothes retailer to think that in their personnel they have more knowledge about what people want to buy/wear than all the fashion labels combined?
Er, I thought the Apple tax was supposedly paying more money than you would for an equivalent spec non apple PC/device, just because it's made by Apple.
Apple - some good, some bad
Easily shippable devices like the Air are priced about the same as the US. A 27" imac has a far greater price difference. Since surface shipments go by volume rather than weight (mostly), there's still some gouging going on.
It isn't as bad as the local goods though. A nice Camembert shipped from France is a mere $1 more than the local brie. Stroopwaffle shipped in from Holland is the same price as those made down the road in Victoria.
This is not "made in sweatshop in the Philippines vs expensive 1st-World labour" price differences. It's just food importation is made awkward by our local laws and geography and your going to pay dearly for it.
Billington's Mollasses sugar, (small box) is $5.39/£3.47 vs 98p in sainsburys. There are no other option for mollasses sugar in Oz. Ah yes, England, that major sugar-producing country... bananas are currently £9.50/kg vs £0.68/kg in the UK, sweet pineapples x2 £3 the UK vs £6.40 in Oz, rice pudding £2.20 vs £0.84 and my personal favourite, Bendicks mints. £4.09 in Sainburys, yours for just $42/£27 at the local shopping centre sweet counter!
Australian GST at 10% vs UK VAT at 20%(?) has little to do with anything. Prices on a some IT things have dropped as the AUD increased in strength, but on the whole things are similar to when it was 2.7AUD/1GBP and now it's about 1.55AUD/1GBP.
I would just like to say a big "thank-you" to Costco for coming to Melbourne and extend my extreme disgust that the Royal Mail no longer ships surface mail around the world.
It's been the other way around before now
Importers and retailers are finding out that the market forces are making them redundant as the consumer can now import goods directly and easily.
This would also applies to the shopping centre owners who now have a whole lot of space that's not worth the current cost their asking.
Just like book stores are changing from a 'book store' to a 'printed paper back' store. There will always be a market, but it will be smaller.
Time to change your business structure or close up and go home.
Corporations wanted globalisation...
...this is the corollary. Globalisation works in both directions.
"Apple Tax" is a troll
I'm in NZ, which is mostly in the same situation as Australia, only more so. IME, Apple prices here are much more closely aligned with world prices than some other goods. E.g., I bought an iPod Nano in the States, and saved myself essentially nothing. OTOH there were some B+W headphones in an Apple Store for USD $299, which I thought about. Should have bought them: close to NZD $600, and Amazon won't sell to this market.
Still, Apple in the headline gets people looking, doesn't it.
Even online Aussie is cheaper
I have purchased a pair of audio-technica headphone from a local online aussie store much cheaper than ANY bricks and mortar store I received them within 12 hours from the purchase so they would have been sent locally and so included GST.
It is the Hardly Normals and the other inflexible bricks and mortar stores with huge margins that are actually screwing themselves.
that every dollar extra paid for one lot of over-priced retail goods is then not spent elsewhere. The money saved online doesn't just disapear - it is still in the consumer's wallet waiting to be spent elsewhere in the economy. Taking it off them at the point of importation just means it is not available to go into some other part of the retail sector a few days-weeks later, so no real win on average and probably a loss averall for all involved (except the tax man).
No Australian commission ever said or implied 'bull-dust'
That is an USA-ism.
"BULLSHIT" is much more the Aussie vernacular and some of us still like to call it how it is!
UK is nearly as bad
We're still "treasure island" for many items. Exactly same Dell PowerEdge R415 server bought at same time from Dell UK and Dell USA and the USA dollar price was just 5% more than the UK price, including taxes and delivery.
Lazy people looking for the easy life
The Aussie market is a blatant rip-off ! it may not be the retailers but someone is ripping of the australian public and the only way this will be resolved is thru competition. I would have been happy to pay 50% more to an aussie store but this is rediculous. Oh its not my fault.. is the lazy cry... yes I know heard all this excuses... but now it is the retailers problem best you do something and quick. This is not a consumer issue or a taxation issue This is the free market and its about time aussie big business' learn a hard lesson.
(Note: even with a poor exchange rate these still half the price)
Here are my recent purchases
Lets see .....
Levis au $100
levis US $30
Charger AU $485
Charger US $180
T-handle AU $120
T-handle US $15
All of these are the exact same brands
They wanted free markets
So what's the problem?
I'm free to shop where it's cheapest.
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