Taxing all online goods no 'silver bullet'

Taxing all online goods no 'silver bullet'

Lowering the GST-free threshold on goods bought online from overseas would help level the playing field, but wouldn't be a silver bullet for retailers facing myriad challenges, say small business experts.

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And questions remain on how any extra tax would be enforced.

New South Wales Treasurer Mike Baird has called on the Commonwealth to consider reducing the GST threshold on online goods from $1000 to $30, following the release of the final report of the Low Value Parcel Processing Taskforce.

Businessman Mark Gorski, who sells running shoes, clothes and accessories online through Melbourne Running Company, said lowering the threshold would provide a fairer pricing structure.

''[But] the way I see it, there's no point in fighting it,'' he said. ''I just think you need to compete. If you can't compete on price you need to compete on service.''


Mr Gorski ran a store in Richmond under the same name, which closed its doors eight weeks ago as the business moved solely online.

His biggest issue is the cost of buying running gear from suppliers, who have not reduced their prices in line with the stronger Australian dollar. He could not imagine how changes would be policed.

Australian National Retailers Association chief executive Margy Osmond said it was important to remember GST did not go to retailers. The association has proposed a threshold of $100.

''The GST that's collected in this state will be going back into communities across the country,'' she said.

Emily Wright, owner of handbag and accessory label Nancybird, said it wasn't a huge issue for her business.

She preferred to compete on ''great design'', but noted Australians were becoming more price sensitive.

A greater challenge is the rising cost of materials - such as cotton, silk and leather - and labour in China and India, where some of her goods are made.

E-commerce consultancy White Labelled works with physical stores to improve their online strategies.

''In the interest of fairness I see no reason why imported product shouldn't be equally taxed,'' said managing director Paul Wilson.

But he said a lower threshold wouldn't be a silver bullet. Often the price difference between local retailers and overseas rivals was far greater than the GST component, he said.

Rather than lowering the threshold, GST should be applied to all overseas online purchases, said Peter Strong, executive director of the Council of Small Business of Australia.

''That takes a big onus away from customers and Australia Post - they're not looking for the costs, they're just making sure the GST's paid,'' Mr Strong said.

Academic Chris Berg said there was a broad base of Australians who would be ''highly opposed'' to paying more tax on their online purchases.

If GST was collected at the border, digital items such as e-books, online movies and music would be difficult to account for, said Mr Berg, a research fellow at the Institute of Public Affairs.


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