Government gives new retail taskforce chance to prove dropping online GST threshold could work

The Productivity Commission might have all but dismissed the prospect of lowering the $1,000 GST threshold on overseas online purchases, but the Government isn’t giving up and has established a new retail taskforce that has six months to find financially responsible ways of lowering or eliminating the threshold.

The taskforce is recommended by the Productivity Commission, whose updated report into retail notes that there are “strong in-principle grounds for the LVT exemption for GST and duty on imported goods to be lowered significantly, to promote tax neutrality with domestic sales”.

The report, released this morning, highlights “challenging” trading conditions and longer-term trends for retail.

This Commission says the taskforce should “recommend a new process [for low-value imported parcels] which would deliver significant improvements and efficiencies in handling without creating delivery delays or other compliance difficulties for importers and consumers.”

If this can be done, the Government is recommended to “reassess the extent to which the LVT could be lowered while still remaining cost-effective”.

The PC stresses that the cost of raising the additional revenue should “at least be broadly comparable to the costs of raising other taxes.”

COSBOA executive director Peter Strong says the cost of delivering packages in Australia needs to fall, and there’s a strong case for applying the GST on online goods valued at under $1,000.

“We congratulate the Government on their response [to the PC report], but still believe that the GST could be collected at the point of sale by credit card companies,” Strong says.

“Retail is in a state of change. And industries who’ve gone through change often need assistance to get through that.”

Strong has also welcomed the taskforce’s focus on postage charges, describing current rates as “uncompetitive”.

But Yasser El-Ansary, tax counsel at the Institute of Chartered Accountants, says “you can’t solve a major structural transformation like this by changing the tax rate.”

The Government says the taskforce will provide a “comprehensive blueprint for reform” and costed alternatives for the Government’s consideration.  

The PC recommends:

• The Australian Bureau of Statistics to monitor and report online expenditure.
• A review of parallel import restrictions.
• Deregulation of retail trading hours.
• Examination of retail employer concerns about the Fair Work Act.
• The reduction of red tape.

It also says the taskforce should receive advice from Customs, the Australian Quarantine and Inspection Service, Australia Post and the Conference of Asia Pacific Express Carriers.