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Retailers call for elimination of GST import exemption to level playing field

By Patrick Stafford
Friday, 20 May 2011

Australian retailers have called for the Government to completely eliminate the low-value threshold on imported goods, arguing that GST should be applied to all online sales and that this would provide a level playing field for the domestic industry.


The recommendations are included in the Fair Imports Alliance' submission to the Productivity Commission inquiry on the state of the retail industry, and also say that Australian online retailers should be branded as local in a type of "Buy Australia" campaign.


"If there is a formal recognition of a particular company and that they sell in Australia, we know that the research shows Australians want to buy from them," spokesperson Brad Kitschke says.


The Fair Imports Alliance represents a number of different retailing groups including the Australian Retailers Association, the Australian Sporting Goods Association, the Australian Booksellers Association and the Australian Music Association.


The calls for reform comes alongside a number of different recommendations handed to the Productivity Commission from retailers, who are frustrated with a combination of poor trading conditions and a flock of buyers moving to cheaper, overseas alternatives.


In fact, the Fair Imports Alliance says that online sales are no longer just a small percentage for online sales, saying online commerce accounts for almost 20% of total non-food retail sales.


The main recommendation from the Imports Alliance is that the Government completely removes the low value importation threshold, currently at $1,000. This would mean every sale made for an offshore retailer would incur GST, no matter the price.


This coincides with recommendations from Council of Small Businesses of Australia chief executive Peter Strong who has previously argued that all offshore online sales must incur GST.


"This is obviously leaning on further examination of the threshold, but the only way to make the market fair in this economy is to play by fair rules. And we think the online marketplace and level of trade there is only going to increase."


"It would work exactly the way it does now. If you buy a package and that incurs GST, any package would be charged under the normal circumstances."


Kitschke rejects criticisms that this would be an administrative burden, saying that "if it's feasible to charge when it's over $1,000, it's feasible for this as well".


Other recommendations include branding domestic online retailers as "Australian" in order to promote local activity, and more funding for businesses to transition to online.


"The Commonwealth Government has cut $15 million from the small business online program which was geared towards the online marketplace. We want to see businesses having a multi-channel approach and have them focus on the way that best serves their customers."


Another big recommendation would be tariff reductions for retailers so consumers could access cheaper goods here – many argue they are forced to maintain high prices because of these tariffs, leading customers offshore.


"There has to be a recognition that most goods are not made in Australia, and reducing tariffs would allow savings to be passed on to the consumer."


But analysts point out the regular price differences between local retailers and online alternatives would be huge even with adding GST and reducing local prices. Kitschke argues that if this is the case – so be it – and that at least there is a "level playing field".


"I think the market should be at a level playing field, and if there are price reductions available, at least Australians will have access to that."


The Productivity Commission will release its full report later this year.


This article first appeared on SmartCompany.

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