Proposed GST Changes Could Cost Australian big $$$
Why is this Change Being Considered?
The argument to lower the GST threshold on imported goods from $1,000 to $20 is being led by powerful Australian retailers who have seen their market share decline while the online boom has taken off in the past few years. They argue that by not imposing the GST on online purchases under $1,000, foreign retailers have an advantage they cannot match.
Critics see this as a thoughtless reaction, hitting consumers with added costs and delays while ignoring the real reasons Australians shop online. Some of the online social buzz around this topic suggests many consumers just don’t feel Australian retailers are keeping up online, at any price.
A recent Choice.com.au study of online shoppers found that only 12% of shoppers said saving on duties and tax was their main reason for shopping online, while 68% say that shopping online saves them more than the 10 GST, compared with a local retailer.
Proposed Changes Affecting Online Shoppers
Currently the government is considering two options:
- Government will absorb the extra cost of collection
Lowering the online shopping threshold to $20 would rise more than $550 million in extra revenue per year however the cost in administering such as change would be up to $1.5 Billion per year – 1.5 Billion tax payer dollars. It seems unlikely the Government will choose this option and take the cost from the Federal Budget
- Pass the extra costs on to consumers
Under this option, consumers would see a collection fee charged to the consumer when they pick up their parcel. This fee would include the 10 GST, plus a charge levied by the collection company to check the parcel. Choice estimates that the cost of $20 parcel could rise to $35 and consumers would see added delays having to collect and pay this fee on their online shopping parcels.
What looks most alarming to some; under this proposal consumers would pay up to $13 extra on a $20 purchase, just so the government could collect $2 more in tax revenue.
Hopefully the final plan won’t cost the tax payers more in admin cost that it earns in tax dollars.