License article

States to eye online shopping for GST boost

State treasurers will this week consider calls to cut the GST-free threshold for goods bought from overseas online stores, in an attempt to bolster flagging revenues from the tax.

Under current rules, products costing less than $1000 that are privately purchased from overseas are not subject to GST, sparking complaints domestic retailers face an uneven playing field.

State governments – which receive the revenue raised by the GST – also miss out on about $600 million a year due to the threshold, and this foregone revenue is projected to rise as online shopping takes off.

In a meeting of state Treasurers on Thursday, NSW, Victoria, Queensland and South Australia are expected to make the case for Australia’s threshold being lowered so that it is brought into line with other countries.

NSW Treasurer Mike Baird, who wants the GST-free threshold to $30, will raise the issue as a "key consideration" at the meeting, a spokeswoman for Mr Baird said.

Victoria’s Treasurer, Kim Wells, has also supported a lower threshold if Canberra can devise a cost-effective way of collecting the extra tax.


Any move to cut the threshold would require backing from all states and the federal government – and the Gillard government has so far played down the likelihood of a change to the threshold.

However, it is likely to come under renewed pressure to consider the issue from a high-level panel looking at how tens of billions in GST is shared between the states each year.

In a final report handed to the government last week, former premiers Nick Greiner and John Brumby and businessman Bruce Carter are expected to recommend that changes to the threshold to be considered.

A 2011 review by the Productivity Commission found the administrative costs of cutting the threshold were too high, but other experts dispute this analysis.

A Professor of Taxation at the University of NSW, Neil Warren, said the current situation was ‘‘unsustainable’’ because it was not a level playing field for local retailers.

‘‘At the present moment it’s small beer, but the thing is it’s a problem you need to address so you might as well address it,’’ Professor Warren said.

The simplest way to resolve the situation was to require foreign retailers selling into Australia to charge GST, he said.

Mr Greiner has also called for a debate on raising the GST’s rate from 10 per cent or broadening its base, but this was ruled out on Monday by the Treasurer, Wayne Swan.

‘‘We believe that the GST, by lifting it or broadening the base, would really hit people, particularly battlers, really hard. And that's not a priority of this government,’’ Mr Swan said on Monday.