Australia’s state treasurers all agree that they want to reduce the GST threshold on online purchases from overseas from $1000 to as little as $20, but they can’t agree on how this can be done cost-effectively.
Consumer group CHOICE, and many others, have pointed out that the cost of collecting the tax will be higher than the revenues obtained from it, because Australia Post and courier companies would have to effectively act as tax collectors and add their administration costs to their delivery charges.
CHOICE has pointed out that this could raise the cost of a $20 item to as much as $35, as well as slowing down delivery, for a net revenue gain of only $2 to the Government.
The state treasurers met yesterday, with the so-called ‘Internet tax’ on their agenda, but it was not discussed in detail. Federal Treasurer Joe Hockey said the states had been "provided with the material they had previously requested on the costs of any changes to the online threshold. They will now consider that advice. There was no agenda item to discuss any changes to the base or rate of the GST."
Because GST revenues go to the states, they are all keen to lower the threshold. So is the retailing industry, which believes it is harming local sales, even though most online purchases are from local web sites.
NSW Treasurer Mike Baird said various scenarios had been presented to the state treasurers. “It was a very positive discussion, it is clear there are a lot of consensus across the room. We need to do this.
“If there is an agreement, we will come together – that is, the states and the federal government will work though every line of that business case. We’ll ensure that whatever model is considered it will be done in the most cost-effective way.” The treasurers will meet again in March.
Critics have pointed out the many problems lowering the threshold would cause. The administrative overheads aside, it would need to rely on the cooperation of the delivery companies, and would be difficult to police.
Of particular concern is the purchase of electronic goods such as music, videos and eBooks, a tax it which it would be virtually impossible to enforce.