back to article Online shopping tax slug not worth the effort: National Australia Bank

State and federal governments lovingly eyeing off a billion-dollar windfall if the GST threshold on online purchases is lowered are deluding themselves, according to a former Treasury economist now with the National Australia Bank. The NAB conducts a long-running research series into online commerce in Australia, giving weight …

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  1. Thorne

    Cause of their woes....

    "The threshold has long been fingered by bricks-and-mortar retailers as the cause of their woes,"

    Maybe if they were only 10% dearer but when their 100% to 1000% dearer maybe they need to look elsewhere

  2. poopypants

    This is simplistic. Reducing or eliminating the tax threshold would shift a lot of purchases to local stores.

    (This assumes that the local stores are not price gouging. That may not be a valid assumption.)

    Assuming the same number of imports, they would shift from individual imports requiring a hight level of government effort to process, to fewer bulk imports requiring less effort.

    Of course, any government that made this change would likely lose the next election, so there is that. :)

    1. Scoular

      Local stores are price gouging in a massive way and that is the problem. They claim that manufacturers charge them more and of course they have been happy enough to just pass that on with their margin added instead of asking for a better price. The internet has damaged that little game and they want to force Australians to pay more.

    2. paleoflatus

      Well said!

      The price differential of most Australian goods is well over the paltry 10% that the GST would add.

      The main difference would be increased red tape and consequently slower service. That's obviously what the Australian retail lobby want.

      I'm prepared to wait, so my buying habits would not change, although my vote certainly would. I object strongly to my government being pushed around by lobbyists.

      1. Urh

        The price difference isn't the point...

        ...the point is that local retailers refuse to compete on price, so they want to frustrate smart consumers with bureaucracy. The convenience of online shopping is somewhat diminished if you have to file papers with customs (and pay the ATO their 10%) every bloody time you want to avoid getting reamed by the local oligopolies.

        Some online retailers may even think that the bureaucratic wrangling isn't worth the hassle for such a small, remote market, and may simply choose not to sell to Australians at all. Which is exactly what the local extortionists want. It's funny - these bastards were all about embracing globalisation for the purpose of improving their bottom lines, now that consumers are able to do the same, they're crying foul and are demanding a regime of neo-protectionism.

    3. TheFatMan

      "This is simplistic. Reducing or eliminating the tax threshold would shift a lot of purchases to local stores"

      Bollocks

      as an aside - on more than one occaision shops have told me that they dont have my item in stock and get it for me in a few days.

      Why should I pay them to buy something of ebay or overseas which they will just pass on to me and 5 times the price?

      1. Tac Eht Xilef

        F' 'em...

        "on more than one occaision shops have told me that they dont have my item in stock and get it for me in a few days."

        A few days? You're lucky!

        I've not long come back from an attempt at buying some stuff (electronics bits & pieces) with about 1/2 of what I was after. For the other 1/2, I was told - quite seriously - "we can order those in for you, they should be here in about two weeks, but maybe after Christmas". I came back, ordered them from a US wholesale/retail supplier, and they're already in the hands of Fedex - I expect them to be delivered to my door on Friday, maybe Monday.

        The price? Including shipping, it comes to 1/3rd of what the locals wanted. Genuine quality parts too, not the random chinese knockoffs the local mob sells. And I'm kicking myself that I didn't think of ordering them as samples from the manufacturers; it would've been free (including delivery in the same timeframe).

        And it's not just tech bits, or overseas sales vs GST that's hurting local retailers - my parter was chasing some new clothes last week, knew exactly what she wanted (a local label), and hit the high-end stores. Again, nothing in stock, two weeks or more until they get their next order in. She ordered them direct from the label's website Tuesday lunchtime; the courier turned up Wednesday morning. Price? Several hundred dollars, but still ~1/3rd cheaper than in-store retail price.

        Local retailers have many problems with being competitive, and some of them aren't even their own fault - I'm looking at you, ridiculous retail rents - but shit, if you're expensive and don't carry stock then the GST threshold on imports is the least of your problems...

  3. John Tserkezis

    "State and federal governments lovingly eyeing off a billion-dollar windfall..."

    Even though they've been consistently saying it'll cost more to collect it than the gain is worth? Even though that was the reason they took it out in the first place? No, it is the three big retailers who have been whining about this all along (not mentioning any names, they know who they are).

    I'm buying some gear right now that equates to about two-thirds of the local Australian price. And that's accounting for GST too. This has gone far beyond "saving the locals" when you get price differences of hundreds.

    So here's to your thinking that you're going to make money by forcing GST (two fingers, and a rasperry sound).

  4. russsh

    Coincidence?

    "$360 million? A pittance. We lost that much when we let the kids play with forex options."

  5. OzBob

    Nice quote from that independent australian movie "the castle"

    pity when they broadcast it in the UK, they cut the casually racist comments that the aussies are so good at.

  6. Mike Green

    This isn't going to help retailers.

    When Borders Australia went bust, they had a closing down sale. I went there with the wife with the hope of getting some cheap text books. Even with a 50% price cut, Amazon UK was still 10 or 20 quid cheaper, and at the time they were doing free shipping to Aus. With that kind of price difference, expect a few more retailers to go before prices get reasonable. These companies were loving it when they could outsource labour to cheaper markets, but when the consumer outsources their purchases, they don't like it so much...

  7. Tim99 Silver badge

    To big-note myself

    To big-note myself Link - TheRegister, I previously wrote:-

    Goods & Services Tax

    ... we who are fortunate to live in the Antipodes do often get ripped off. Some of this is because of our relatively small population, some of it is because of our long supply chain: As explained to me many years ago when I imported goods: a $100 item imported into Oz may have an importers markup of 30%, a distributer/wholesaler markup of 30%, then a retailers markup of at least 30%. Now adding local taxes could give a final price to the punter of ~$250. A direct import from an internet supplier including shipping would have the final price of ~$130 (At the moment, a personally imported item of less than $1000 has no tax payable).

    ....

  8. croc

    Could be worse, y'know... Last year I bought the parts for my new PC over in OZ, and paid for my return airfare with the savings over purchasing in NZ. I paid GST (in both countries), spent two nights in OZ (NOT the Hilton, but hey!), took a few Aussie friends to dinner and STILL had money left over. The Kiwi's REALLY know how to overcharge!

  9. OzPhantom

    $1000

    The $1000 is NOT an administrative decision by the Australian Customs and Border Protection Service. It is actually a legal requirement under section 68 of the Customs Act 1901 and Regulation 31AC of the Customs Regulations 1926. It is purely a cost saving activity. Customs made an assessment of the costs involved in collecting the revenue on the parcels under $1000 and found it would be greater than the revenue raised.

    It's amazing that industry was fully supportive of these changes introduced around 2004 but now they find it unfair. Prior to 2004 it was about $250. This was changed to reflect the true value that $250 had when it was first introduced (actually it was nearer to $1150 allowing for inflation).

  10. John Angelico
    Boffin

    Thank You - finally the truth emerges

    "Currently, the Australian Customs Service allows incoming packages to escape assessment for GST if the goods are valued at less than $AU1,000. This administrative decision, labelled a “loophole” by the retail industry and its lobbyists, is designed to avoid spending five dollars in bureaucracy to recover three in tax."

    To be more precise, ACS does not attempt to collect amounts up to $A100 in charges of all kinds (duty, demurrage[rare], GST etc) from importers not registered for electronic transactions with them (usually this means end-users or final consumers (in bureaucratese).

    Importers using a Customs Agent or dealing direct with ACS electronically will be assessed for all amounts, so it isn't a simple matter of asking "how many transactions up to $A1000?"

    For items not attracting duty, the assessment can be shortened to refer only to GST, thus mathematically giving rise to the $A1000 value for entry, but as the NAB survey points out, few transactions would yield the maximum of $A100.

  11. Anonymous Coward
    Anonymous Coward

    Come to denmark, where the post office collects the fee.

    I accidentally ordered something from China that cost $14 USD (IIRC). The fees and tax came to about 75 dollars.

    I think the low limit is about $20, but they can "assess" value to stop dodgy invoicing. My part had a real invoice enclosed (it really did cost $14), but they valued it at some stupid value, added import duty, VAT and then applied their service fees

    The couriers and post office have a nice little business going charging stupid high fees, because the government mandates that they collect the tax for everything, so the couriers and post office charge the customer for the service.

    There are few places in the world as fucking stupid as denmark when it comes to leveeing taxes.

    (And don't get me started on the terrorist tax laws. Try putting some cash in the bank here and see what happens)

  12. Jerry

    Think laterally

    The obvious thing to do is not impose the tax on foreign sourced mail-order imports, but drop the tax on locally sourced mail-order sales.

    Then Australian retailers can compete on a level playing ground with international - plus with the advantage of being closer to market so quicker and cheaper. (though not if you live outside NSW and Vic)

    The result would be massive jobs growth in mail-order workers, and Australia Post would get a new lease of life. There'd probably be an increase in sales as well.

    Win-win I think!

  13. Mark Simon

    Won’t make much difference …

    It’s not just the price difference which attracts buyers to overseas. It’s the fact that local suppliers don’t have the stock, or the range, or the understanding to justify wasting your time trying to buy locally.

    Local retailers shooting themselves in the foot here. They are positioning themselves against potential customers, and wondering why customers don’t fall over themselves to flock to their stores. Perhaps they might take an interest in becoming more competitive rather than making everybody else less competitive.

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  14. Grey import

    Just take my money already!!

    I'm happy to pay 10%, I encourage it! Just do it already so that Hardly Normal and Westfield have to face up to the fact that their feedlot consumer culture forced on the masses for so long is now defunct. We've gone free range or feral and we re not coming back !!

    All these transactions are electronic. Simply get the Aussie banks(building societies etc) to collect the fee OR list the sum of transactions annually that we're made to a commercial org and make it up to the individual to claim back the GST applied if it's not relevant (or paid elsewhere) like bank interest. Banks are built around collecting fees, piss easy for them.

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