Retail mogul and billionaire Solomon Lew has made a blistering attack on the government, warning that the economy has "run out of time" over the issue of the $1000 GST-free threshold for purchases made over the internet, with Australian jobs and businesses at risk.
Speaking this morning at the annual general meeting for his retail business Premier Investments, which owns Just Jeans, Portmans and other clothing chains, Mr Lew said there was such overwhelming evidence of damage done to the local economy by the tax loophole that governments must act.
"My message to the government is that we have all run out if 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!" Mr Lew said.
Last week a GST review made by former NSW premier Nick Greiner and former Victorian premier John Brumby recommended consumers pay GST on overseas purchases made over the web.
The federal government said it needed more time to assess the impact of the changes.
Yesterday, Assistant Treasurer David Bradbury said that the $1000 threshold was ''very high'' compared with overseas, and the government would start preparing ''business cases'' for changing the tax rules governing low-value goods purchased from overseas.
But Canberra is not moving fast enough for Mr Lew.
"My message to the government is that we have all run out of time," Mr Lew said this morning.
"In every other comparable country, governments have recognised the need to deal with this issue as a serious matter of public policy and have already acted - while our government plays 'process' games."
Premier chief executive Mark McInnes agreed, calling the loophole "an appaling piece of government policy".
Mr Lew, who is a former member of the Reserve Bank board, said he had met on numerous occasions high-ranking Federal government Cabinet Ministers to discuss the GST-free threshold but had been met with delaying tactics.
‘‘The Ministers’ response was ‘we will look into it’, the famous mirror trick, we will look into it,’’ Mr Lew said.
‘‘I went to see Wayne Swan in 2010 and of course I explained to him what was going on and he used delaying tactics - formed an enquiry, then a second enquiry and a third enquiry and nothing has happened.
‘‘And now we are hearing it will probably happen after the next election because it’s a ‘hot potato’ as one report said this morning.’’ Mr Lew said it was a ‘‘free-for-all’’ and it needed to be stopped.
A range of reviews have been held on the GST issue, with some experts calling for the $1000 threshold to be scrapped or lowered to $500 or $20.
Mr McInnes was equally dismayed and fed up by the lack of progress on addressing the favourable tax treatment for offshore online retailers and reducing or removing entirely the $1000 GST free threshold for online purchases.
‘‘It’s like an episode of ‘Yes Minister’,’’ said Mr McInnes. ‘‘We will form a taskforce to form an enquiry to form a panel. So we’ve had the Productivity Commission in favour of it, the low value parcel processing taskforce report in favour of it, independent Labor and Liberal [former] Premiers, Nick Greiner and John Brumby, report in favour of it and the fact is we are still left with it.’’
Mr McInnes said while 75 per cent of all online purchases made in Australia may be from domestic websites, that proportion was inflated by the inclusion of groceries and other consumer items. He said a recent report from Ernst & Young showed when it came to a category like fashion 75 per cent of purchases were actually from foreign websites that did not pay GST or duty, with the same levels recorded across other discretionary sectors such as perfume and cosmetics.
Mr McInnes also suggested the GST-free threshold was a potential security issue as packages coming into Australia were not checked by customs officials.
‘‘No security, no checks no safety checks, consumers, people with different motives, could be bringing anything into this country under $1000, and no other western government in the world has allowed it.’’
Stifling online business
Mr Lew said during the year Premier had invested heavily in its online retail business with 67 per cent growth in internet sales during financial year 2012. But, he said, no Australian online business was capable of reaching its full potential while a "flawed, two-tiered tax system remains in place".
In a withering attack Mr Lew said the current government policy on the GST-free threshold failed the fundamental test of good governance to act responsibly.
Canberra should not, he said, ‘‘pander to perceived populism at the expense of sound public policy''.
He said the government was also failing Australians and the hundreds of thousands of people who work in retail, the nation's largest employment sector. Mr Lew added it was very hard to compete when ‘‘your own government is on the side of foreign competitors''.
He also called on the RBA to make a meaningful cut to official interest rates today