Any action on reducing the threshold on GST imports has been put off until the 2014-15 financial year at the earliest, given deadlines set by the Federal Government.
The Treasurers of NSW and South Australia will lead a working group to examine changes to the taxing of goods bought online with an aim to have recommendations in by the end of next year.
Another group from the Treasury will ‘examine business cases’ related to any change.
This is in addition to the three extensive reports on the issue – from the Productivity Commission, a special Low Value Parcel Processing Taskforce put together by Federal Treasury, and the GST Review Panel. Each of these conceded that the system was inequitable and needed to be changed.
With only ‘recommendations’ due by the end of next year, an optimistic estimate for implementation of any changes would be July 1 2014, and more probably July 1, 2015, unless the government has a change of heart, or a new government sees in new policies on GST on imported goods.
The only firm move so far beyond the establishment of taskforces and panels is an expressed intention to introduce legislation separating the threshold for customs duty from the threshold for GST, allowing the threshold for GST to be lowered in the future if needed.
The federal government has chosen to disregard the advice of the GST Review Panel, and data in the LVPPT group report, that the threshold could be reduced to $500 immediately with a net benefit to publiccoffers after handling costs are factored in.
While (except for consumer advocacy group Choice) almost everyone familiar with the issues now concedes that the current threshold is unfair and a burden on the local retailing industry, the issue has been effectively buried until after the Federal election.
Leading retailers Solomon Lew (Just Jeans et al) and Paul McClintock, (Myer chairman) have both come out strongly during the week in support of lowering the threshold immediately.
At the AGM of his Premier Investments group Mr Lew cited the collapse of retailers including Borders, Colorado, Brown Sugar and Fletcher Jones and labour force figures showing that 22,600 jobs had been lost in the retail sector over the past 18 months as evidence the government needed to act quickly.
“In the face of the overwhelming evidence of the damage being done to Australia by this policy, and the independent assessments of several highly-credible reviewers, yesterday the Federal government announced they needed more time to assess the impact of changing its current low-value threshold policy,’ he said.
‘My message to the government is that we have all run out of time. Change needs to be made right now, and if the government needs any further proof of what’s at stake, I have one word for them – jobs.
‘It is very hard to compete when your own government is on the side of foreign competitors.’
Mr McClintock was a little more moderate at the Myer annual shareholder meeting: ‘As a company, we are still frustrated by the duty and GST loophole that exists that provides overseas online retailers with an advantage over local retailers. The internet has broken down traditional trade barriers and it is critical that reforms keep pace to ensure our local businesses are competitive,” he said.
‘It’s tremendously important for state governments as well as our industry that the government moves effectively and quickly to close the loophole, it really is incredibly unfair to have a situation where people can do exactly the same transaction in different ways and have different tax consequences.”
A report by Ernst and Young commissioned by National Retailers Association found that a continuation of the $1000 GST threshold could cost NSW $752.9 million in lost revenue between 2012-13 and 2014-15.
The report also found that up to 33,400 local retail jobs Australia wide could be lost, along with associated income tax, payroll tax and other revenue, if this slice of the domestic economy moves overseas.
A reading of the Government’s foot-dragging Interim Response to the Low Value Parcel Processing Taskforce Report is both illuminating and depressing. (In four words: ‘It’s all too hard.’)
Alternatively, this one-sentence summary gives a sense of the government’s urgency in addressing the issue: ‘The Government will examine ways of improving the efficiency of low value parcel processing, with a view to potentially reducing the low value threshold for GST in the future.’
– That is, don’t hold your breath!