"We know it's not popular, but it's the right thing to do" .... NSW Treasurer Mike Baird. Photo: Wolter Peeters
GOT some great deals doing online Christmas shopping on overseas sites? That is exactly why state governments are worried.
State treasurers - Labor and Liberal - will demand the federal government set a clear and rapid timetable for reducing the $1000 GST-free threshold on items bought from overseas websites when they meet the federal Treasurer, Wayne Swan, in Canberra on Monday.
Mr Swan's assistant treasurer, David Bradbury, has said there are ''no simple, quick solutions'' to the problem and is working on a response to a recent report calling for the threshold to be halved.
But the state treasurers, who are missing out on hundreds of millions of dollars of GST revenue because of rising GST-free online purchases from overseas, are growing impatient.
''We have a totally unified position on this. We know it's not popular, but it's the right thing to do,'' the NSW Treasurer, Mike Baird, said.
''We will be saying that they need to look at it urgently, they need to set a clear and agreed timetable to sort this out.''
A spokesman for Mr Bradbury said it would take until the second half of next year to finalise the businesses' cases for the various ways a new threshold could be implemented, after which the government would make a decision about what to do and how quickly it could happen.
Struggling bricks and mortar retailers have also been pressing for the threshold to be lowered.
The independent GST review, carried out by former premiers Nick Greiner and John Brumby, and tax expert Bruce Carter, said the high exemption threshold for the 10 per cent GST on online shopping hurt Australian businesses and cost the states ''hundreds of millions of dollars'' in lost revenue. It says the current low-value import threshold should at least be halved from $1000 to $500.
It said this could be done almost straight away, without changing GST or customs law.
But it said in the longer term, governments should consider replacing the ''at-the-border'' collection of GST with a system that imposed a GST liability directly on overseas suppliers of goods and services.
''Only placing direct liability on overseas suppliers will address the avoidance of GST on intangible imports such as online purchases of music, videos and other software,'' the review said.
The federal government has said implementing an immediate change could throw parcel processing into chaos.
The review said lowering the threshold would not ''be a panacea to local retailers, as has sometimes been suggested.'' But it said this was beside the point.
''We can see no reason why the GST should not be paid on this category of domestic consumption as long as the costs of collection are lower than the tax paid.''.
Australians spent about $10 billion last year online, with about half of that amount spent using offshore sites.