There are more than 10 million parcels being imported into Australia every year under the $1,000 low value import threshold, according to data published by the Customs department, suggesting the Government is missing out on a potential $100 million in lost GST each year.
But the Fair Imports Alliance argues the Customs figure is understating the amount of lost GST, pointing to the Productivity Commission’s Issues Paper released last month which states the amount of lost GST is more likely to be around $460 million.
“I believe that type of figure does not equate well with what the Productivity Commission has found,” Fair Imports Alliance spokesman Brad Kitschke told SmartCompany.
“I think as the Australian dollar increases, and the prevalence of confidence in online shopping increases, this issue will become more at the forefront and start to bite much harder.”
The data comes as debate continues to rage over the role online shopping has in the downfall of Australian retail, with head of the National Retailers’ Association Gary Black saying that 50,000 jobs are at risk over the next few years due to online shopping.
Preliminary data from the Customs department appears to show the number of parcels being imported under the $1,000 low import tax threshold exceeds 10 million every year.
The Customs and Border Protection Service has published this data as part of a campaign designed to investigate whether goods shipped from overseas are being undervalued to escape paying GST. Currently goods worth over $1,000 are subject to an imports tax.
Retailers are concerned that with the strength of the Australian dollar, more people are shopping online and international companies are taking advantage of this to avoid paying GST.
But the data shows that most of the goods being shipped into Australia under the threshold cost under $100.
In total, there were 7,579,585 consignments recorded in the nine months to March 31, 2011, compared to 8,020,565 in the 12 months to June 30, 2010.
The data does not distinguish between goods purchased online and through other means.
The total value of those consignments was $932,493,422 in the nine months to March 31, compared to $874,136,452 in the 2010 financial year– about a $70 million difference.
But 5.1 million of the items imported in the nine months to March 31 were valued at between $0-100, with a total declared value of $117 million. The next biggest category is goods valued between $101-200, with 972,000 consignments a total declared value of $140 million.
The data has been published, in part, to assist anyone interested in preparing a submission for the Productivity Commission inquiry into the low value import threshold. It contains data of air cargo reported to Customs and Border Protection.
The category of goods valued between $901-$1,000 contained only 77,540 consignments – the lowest out of all the categories – with a total declared value of $73 million.
The Customs department was contacted this morning for comment by SmartCompany, but no reply was available before publication.
Jason Picknell, founder of postal company Parcel Express, says while the data is really only giving a “snapshot” of the Custom department’s audits, it does appear to show there isn’t a high incidence of rorting.
“This just reaffirms what we already know – there aren’t a lot of high value items being purchased online, because in part consumer are concerned about making high purchases and it’s a new market for many.”
“Books, CDs and so on are the more high volume purchases.”
This lines up with data revealed by SmartCompany last year, which found that most goods bought online by Australians have a value of less than $1,000.
The data comes weeks after the Customs department published preliminary findings of an investigation into the low value import threshold.
The Customs data revealed in March does show that some are taking advantage of the system. There were 2,000 consignments identified as having some form of non-compliance, resulting in $1 million of deferred GST.
But Picknell says the amount isn’t enough to justify lowering the threshold.
“There are always going to be people out there rorting the system, and that’s why there are checks and balances in place.”
“What I think is happening is that there are people hoarding and selling for higher prices, but I don’t think there are very high incidents of that occurring.”
The data comes as NRA chief executive Gary Black has told News.com.au that the growth of online retail is hurting Australian jobs, with 50,000 workers at risk over the next few years. He also says the collapse of Borders was due in part to the growth of online shopping.
“That’s a lot of money and it’s rapidly rising and we have a Federal Government that is asleep at the wheel on the issue,” Black said. “When you see the trends, the 50,000 jobs is not an extravagant claim.”
Kitschke says the issue needs to be addressed.
“The Productivity Commission paper identifies about $460 million a year, and we’re not even talking about the application of customs duty, and so on. We believe the lost tax revenue is an issue that needs to be addressed.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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