Australian online shoppers have been given a 12-month reprieve from paying GST on items purchased from overseas retailers under the value of $1,000. One retailer says our politicians have been talked into delaying the tax by international retail giants like Amazon.
Late on Monday, the Federal Government voted in favour of delaying the introduction of the proposed Treasury Laws Amendment (GST Low Value Goods) Bill 2017 until July 1, 2018.
The new tax, which was due to be implemented next month, would have forced Australian consumers to pay a 10% GST on all goods purchased from overseas merchants, under the value of $1,000.
Harvey Norman’s Gerry Harvey last night argued the change was the result of clever lobbying by overseas online retailers, who have talked Australian politicians into delaying the change.
“They’ve been hijacked,” he told the ABC.
“The unfortunate thing is that (politicians are) susceptible to this kind of activity, which doesn’t say a lot for their mental capacity,” remarked Harvey.
“If a product is $100 or $1000 in a shop in Australia you put 10% GST on it. If the product is the same price and is imported from overseas you don’t put any GST on it. So it’s just a subsidy straight away to an offshore retailer. How anyone can say that’s a good idea is beyond me.”
“If they pay no GST why should anyone in Australia pay GST?”
Last year the Australian government agreed that implementing the tax would help to level the playing field for Australian online retailers’ in the face of growing international competition, and the move would generate an extra $300 million revenue over four years.
However, there has been much talk and speculation about who would fit the bill for the tax, and how it would be collected, which the government still has not ironed out as yet.
The one-year delay to the application of GST to online overseas purchases under $1000, was not ideal for struggling Australian retailers, but would it will allow the Government more time to iron out the practical challenges involved in its implementation, according to The National Retail Association (NRA).
NRA CEO Dominique Lamb says that applying GST to overseas online purchases under $1,000 to bring them into line with domestic purchases from all channels, would remove the unfair disadvantage to Australian retailers.
“While a 2017 implementation date would have gone a long way to helping Australian retailers level the playing field with their overseas counterparts, the logistics surrounding its implementation are challenging, and need considerable time to iron out.”
Lamb says that while the delay is disappointing, it’s important this legislation was not rolled out prematurely.
“There is a myriad of issues yet to be worked out surrounding how it will actually work in practice, but good policy and good governance takes considerable time and meticulous planning – so on the flipside, the year’s delay should give all parties the time needed to work through the issues, to find the best way to implement what we believe will be a crucial boost to the Australian retail sector,” says Lamb.