Development in GST Debate May Herald Change

Mike Baird, the NSW Treasurer, is urging the Commonwealth to drop the threshold for GST applied to products purchased from offshore retailers. He proposes lowering the threshold from $1000 to $30, stating that future growth in online shopping will make the move cost effective.

Last year, the Productivity Commission investigated the costs and effects of lowering the GST threshold, which resulted in the commission raising concerns that the move would be more cost more to execute than the revenue it would generate. On the other hand, it has been pointed out that many of the associated costs would be once-off investments and that the scheme would quickly pay itself off.

Baird instead highlights the predicted growth of online retail, which he says will make the initiative cost-effective in the near future.

“It’s clear that the GST base is growing less than anticipated and the government needs to look at all options to replace revenue that is essential to deliver services and the building of infrastructure,” Baird told Fairfax.

“It’s time that we seriously consider online retailing because it is growing exponentially and means that our domestic retailers aren’t competing on a level playing field.”

If the recommendation to lower the GST threshold to items purchased for $30 or more, the majority of offshore purchases would attract 10 percent extra in tax, with 77 percent of overseas purchases falling shy of $100. The Productivity Commission’s report estimated that as much as two percent of all retail sales ($4.2 billion) were from offshore retailers.

Baird’s recommendations come in response to a request by federal Treasurer Wayne Swan, who has requested a roadmap for the abolition of state taxes such as stamp duty. Baird has pointed to the potential revenue gained from lowering the GST threshold as a means to offset lost revenue from state taxes.

Is this development the ray of hope local retailers have been looking for?

5 thoughts on “Development in GST Debate May Herald Change

    • Paul
    • 7th September

    It’s not just the “ray of hope” retailers will need, it’s every citizen in Australia who relies on a service from their State Government. With less and less GST revenue there’s less State money for education, law and order and infrastructure, amongst other things. Think about it before pitching it as a retailer vs consumer follow-up story like you have in the past.

    1. Hi Paul and thanks for commenting. While I like to think I have given this some thought, there’s always the chance I’ve missed something.

      That being said, I will always strive to write specifically for Power Retail’s readership, which largely consists of retailers and engaged consumers. The broader implications of taxation law and politics therefore sits outside my sphere of interest.

    • Adam
    • 7th September

    Isn’t the current GST threshold $1000 and not $100?

    1. Thanks, Adam. It sure is.

      Please note: I’ve updated the article to correct this error, which appeared in the first paragraph. The mention of $100 towards the end remains correct.

  1. One area of GST collection that hasn’t be discussed much – is that as an online seller many of our partners are based overseas and hence don’t charge GST – eBay and Google for instance. The huge figure spent on online advertising with Google – attracts no GST; same with eBay fees – perhaps some more thought should go into that – it would be most cost effective of collecting than at the ports with products. This also affects income credits when doing BAS statements.
    Collecting from GST by lowering the threshold doesn’t factor in that high AUD and variety are huge factors for this – if the dollar plummets then the figure to be collected lowers, and as more retailers come online – and less reason to shop overseas.


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