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ARA says Feds losing $600 mil on internet sales

November 4, 2010: The GST-free threshold issue is beginning to develop a more public profile, with ABC Radio’s national PM current affairs program last night following up on recent business stories in the daily press.

Presenter Mark Colvin introduced the story by making a direct link between overseas internet sales and this week’s interest rate hike, which is likely to both push the dollar ever higher and make consumers even more price-conscious.

The story revealed a divergence in attitude between the Australian Retailers Association – which represents all retailers, with an ideological skew towards smaller businesses – and the Australian National Retailers Association, which is effectively a lobbyist for Big Retail posing as a trade association.

‘There’s around $6 billion worth of goods coming in without any form of duty or GST being paid on them,’ observed ARA executive director Russell Zimmerman (pictured above right). ‘Now our concern is that that is $6 billion worth of product that could be sold through Australian retailers.
‘It’s also obvious that there is around $600 million worth of GST the Government is missing out on.’

Zimmerman pointed to the New Zealand threshold of $400 as being ‘more equitable for retail’.

‘…that is $6 billion worth of product that could be sold through Australian retailers. It’s also obvious that there is around $600 million worth of GST the Government is missing out on.’

On the other hand, Margy Osmond from the Australian National Retailers Association is far more relaxed about the issue, saying there’s a chance the surge in online spending won’t last.

‘I think the important thing here is to not do anything in a hurry. Clearly we may be looking at a long term change in shopping behaviour but nevertheless this is a highly complicated and probably I think, logistically difficult process to put in place.’

(Why would a group purporting to represent national retailers support GST-free imports? Could it be that Osmond is adopting the ‘enemy of my enemy is my friend’ approach? Marginally viable, usually smaller, businesses will be harder hit by a loss of sales to overseas sellers. As these are the direct competitors of the group she represents, internet sales could be seen to actually assist in seeing off ‘nuisance’ independents and smaller chains – Ed).

Less surprisingly, Christopher Zinn from Choice also thinks internet sales are A Good Thing.

‘Online shopping can be convenient, it can be cheap and it can be innovative and exciting in a way that perhaps going to the local shopping mall never can be any more,’ he noted.

‘People are experimenting with it far more, even buying bicycles, I mean incredibly shoes from America. People buy shoes because that works for them and they have a returns policy and consumer focus that makes it work.’

He warned the Federal Government about lowering the threshold:

I think they [consumers] would be outraged. I mean we’ve seen some anger round the banks but I think if the online community was suddenly hit with a tax which they feel they are immune from, there would be a certain amount of jumping up and down.

He helpfully pointed consumers to US sites for ‘branded luxury items’: ”There’s doubtless been a gold rush mentality about using the appreciation of the dollar to drive online purchasing, because many items which cost significant amounts here, particularly branded luxury items, can be bought at much cheaper rates on American sites.

The Board of Taxation examined the possibility of levying a GST on overseas internet purchases earlier this year, and found it to be unfeasible, but the Federal Government says it is taking retailers concerns seriously and has asked Treasury to look at the issue again.

On this week’s interest rate hike, the ARA’s Russell Zimmerman noted that retailers are, ‘not going to cope well, they’re finding things tough as it is and this has just sort of taken the glimmer off Christmas.’

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