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Harvey Norman, Coles Call for $100 Online Retail Tax Hike

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Major Australian retailers are calling for a new tax on overseas online purchases in the latest chapter of the turf war against global e-commerce rivals.

Harvey Norman, Coles and David Jones have proposed a new tax for customers in the latest chapter in the standoff between the perceived online threat and the old guard of Australian retail. The proposed tax will be charged on all items purchased over the value of $100 and is the retailers’ latest effort to stave off competition from overseas rivals offering quicker delivery and cheaper goods.

The Australian National Retail Association (ANRA) has urged for the new tax in its most recent submission to the Productivity Enquiry, claiming that major retailers are being hurt by global e-tailers despite cutting prices.

“Australian retailers are cutting prices to the quick, but they still struggle to compete in a global environment where they pay duties and taxes that online importers do not,” said ANRA CEO Margy Osmond.

“They pay wages, rents, sick leave and other necessary benefits that overseas suppliers do not have to pay.”

The ANRA has also called for customs duty to be abolished on consumer goods and for a review of taxes on merchants competing with overseas companies.

This alarmist outlook is getting old as the proof for local online retail growth mounts – Forrester has predicted double-digit jumps in e-commerce spending in the next three years with revenue tipped to reach $36.8 billion by 2013.

Earlier in the year, big ticket bricks and mortar retailers such as Harvey Norman, Woolworths and the Just Group lobbied for a GST on all goods purchased online under $1000. This figure appears to have been downgraded to just $100.

It seems that this petty turf war is masking deeper insecurities about holding up to international standards. Unfortunately, there are no excuses – the path has been laid out. What are your thoughts?

Neha Kale

Article by

Neha is a writer and editor for The Media Pad, publisher of Power Retail. She has a background in business, arts and film journalism and an interest in new media and digital strategy. She is looking forward to exploring how retailers are impacted by the online space for Power Retail. Neha is a magazine junkie whose other addictions include coffee, travel and live music. She likes to run but has a long-time allergy to team sports.

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11 Comments

  • You really have to wonder where these guys have their heads stuck.

    Like Julia Gillard is seriously going to consider introducing another great big new tax.

    I can hear Tony salivating already.

    Reply
    • Michael
    • 15th June

    Originally it was sad and now its just pathetic. These retailers are fat and lazy and want government protection. Next they will want a tax applied on any sales that are not made at their stores (remember Gerry Harvey ‘you cant make money selling plasma TV’s’ comment – just ask JB Hi Fi). Some of them consistently claim that their service sets them apart, yet here they are focussing on price. Does any one of these companies think that the difference between shopping on line (whether domestically or internationally) is about a 10% price difference? Further, do any of these same retailers make house brands in China? You mean taking Australian jobs from manufacturing or from Australian brands and replacing them with Chinese labour? Do they have any credibility? Next thing you will have Coles trying to block Costco getting retail sites, oh wait, they already do that!

    Reply
    • Jules
    • 15th June

    People will eventually accept the tax because it’s still a bigger saving than just the 10%. Unless the Australian retailers improve their prices, range, customer service and most importantly in-store experience people will continue to shop overseas. T

    Reply
    • Wes
    • 15th June

    I believe there is an error in your article Neha, Harvey Norman was not lobbying for GST on all goods purchased online over $1,000 as this already exists. Goods under $1,000 need to have GST added as well and it obviously only relates to international purchases. It seems obvious that the government should add GST to all imports to create a level playing field. Why should Australian stores be taxed while international stores are not? The answer is simply because the government has determined that the collection process would cost more than the GST revenue raised. I don’t think the equation should be so simple. What about the extra jobs that will be created/saved in Australia with the small ecommerce businesses struggling to survive (It’s not just about the big retailers)? I know in my business alone I would have an extra staff member if GST were added to imports under $1,000.

    Michael has pointed out that the difference is more than 10% and I agree, however by adding GST to imports, Australian pricing would be 10% closer to US pricing instantly. The rest is up to the retail stores and Australian distributors/agents.

    Reply
  • Perhaps it is time that we woke up to ourselves and abolished superannuation, bludger’s comp,, holiday loadings, family allowances and all the ridiculous trappings of a non-competitive workforce.

    If New Zealand can survive with $9/hour wages and no add-on levies perhaps we might more appropriately compete on global markets and anyone wanting a job could get one.

    Reply
    • Sandro Santiago Romano
    • 16th June

    A protectionist theme throughout this Global Financial Crisis is resonating loudly by certain (shameful) participants of free-market enterprise. Globalization, as Peter Costello aptly penned in his memoirs some years ago, is a ‘process’, and not an ‘idea’. Globalization summarizes the very interchange of development and growth of our humanity. Capitalism works best when left to her own devices, and she doesn’t need nor require government intervention to introduce new taxes, let alone imply protectionist measures to help “bail out” incompetent organizations for being asleep. If a corporation, for whatever means, has not grasped or heeded the warnings of change in commercial best-practice or consumer trends – that is – to adapt and evolve; that’s their ‘beef’. Period!!!

    When ATMs were introduced in the Australian Banking System in the 1980s, all hell broke loose when unions charged allegorical claims denouncing “the end of the bank teller”. Today, regardless of ones’ opinion of banks, teller and branch staff have never been held with such higher regard by their employers. Why? Because servicing a customer’s financial means today in 2011 leads with a “flexible and convenient” based mantra. The ATM merely did what it was destined to do; to provide another avenue of convenience. Internet banking, as another point of access, has added to improved services overall and not diminished it. (You only have to look at the jobs created also in the IT engineering profession of the banking industry to see that more good than ill has come from this progress. And who would dare argue against this level of job-creation?)

    My question to readers is: Would you bank at an institution today if there was no ATM or internet access? Of course not!!! Because, as a customer, you RIGHTFULLY demand convenience as well as service. Online retailing, as like the ATM, should be viewed as a “complementary asset” and NOT as an adversary; just as the unionists and lobbyists charged fear against ATM roll-outs all those years ago. For those retail enterprises in Australia that harbor these dirty, protectionist thoughts; they will ultimately be condemned by the free-market market system – not by political process – but by (Adam Smith’s theory of an) “invisible hand” of the market’s own consciousness.

    Let the people decide when, where – and now – ‘how’ to shop!!! To the Australian Retailers’ Association: WE supported YOU in your varied quest to relax state government interventions in the debate over retail trading hours over some decades. We voted with our wallets as well as our actions when change was eminent. If, for whatever reason, you continue to believe that “protecting” Australian retail jobs against foreign-made goods (by making consumers pay import taxes on their online purchases) is in the “national interest”, don’t you think that’s going to cry a little bit rich in the background of why your organization exists? What do you think?

    Besides, with the way traditional retailers in Australia behave today: very poor service; mediocre product lines; dirty shop floors and crummy fixtures… Why should I put up with that? I can get what I REALLY WANT online; with no pushy sales people to contend with; cheaper; more time effcicient for MY NEEDS; and did I already mention… CHEAPER? Trying to shut the internet commerce window as you desperately are, will only push more people online in reaction to the traditional retailers for losing touch with its customers a long, l-o-n-g time ago!!! B-Y-E!!!

    (Gen Y – Age 29)

    Reply
  • The key for OZ retailers is to haver a multichannel offer – look, research and/or buy online – pickup instore – more convenient and the customer has direct interaction with the retailer, and no postage costs. Customer can also be treated as a VIP – ideal for loyalty programs
    So it comes down to better service – not better price

    Reply
  • Thanks for pointing that out Wes – I’ve updated it. John, I agree 100%. I think failing to invest in an online presence and expecting to keep customers is arrogant. Major bricks and mortar Australian retailers need to give customers a compelling reason to shop with them or risk the consequences.

    Reply
    • Leanne
    • 4th July

    What I think the big retailers like Harvey Norman, Coles and David Jones fail to see is that even with a 10% GST on all overseas purchased goods the overseas prices are still significantly cheaper than the street retail prices available in Australia (and not to mention that the service and delivery we get is often far superior).

    You really would have trouble explaining why buying Chinese goods from Harvey Norman at an inflated price with very little service is better than buying Chinese goods from China at a very cheap price.

    Further, I can get a delivery from China or America in often under 3 days. Where in Australia with our current way of handling shipping can you send and receive a parcel this fast – Brisbane to Perth takes more than a week at times! To make matters worse, in Australia many retailers have cut back on stock to save money in their business and sometimes I would need to wait weeks at a time to get the same item I could get overseas and have in 3 days time.

    Australians have many issues to address to keep up with the way retail is heading in today’s world. Adding 10% GST to online sales solves none of the competitive issues.

    I would be happy to pay 10% GST on all of my overseas purchases but even happier if I could buy the same product at a reasonable price from a local retailer who has stock and offers service.

    Anyone know a business like that?

    Reply
    • Jennifer Ward
    • 20th July

    Sydney retailers have two serious problems. First there are the greedy, car hating councils (Sydney comes to mind) that find pleasure in making life difficult and expensive for anyone trying to shop or do business. Then there is the appalling non-service, difficulties in cluttered shops, and lack of help when attending shopping malls and strips. Not everyone has a big strong helper to push laden trolleys over speed bumps in the car park or squeeze through boxes and gantries in the aisles. I feel like I’ve just stormed the beaches at Normandy after a trip to the shops- it’s time for a rethink about customer service retailers or you will be history before too long.

    Reply
    • Free-market
    • 3rd May

    I agree with whats being said here, but yes, the strong aussie $ (if it continues) will always make it more attractive to buy from o/s (even with postage costs), and will still be cheaper than buying online in OZ regardless if a GST component is forcibly added.

    To Sandro, I think your thoughts/opinion on the banking industry are misconstrued/ill informed, look at the number of bank branches and australian jobs which have been cut in the last 10 years, with the large percentage of banking processes being shipped off-shore. Bank employees held in high regard? I think not…..the number of bank employees made redundant far outstrips the job creation of IT professionals looking after electronic/in house banking systems (and most of those IT professionals are located off-shore as well, only a small number are Australian). Just speaking from my personal experience in the corporate/management side of the banking industry.

    Also, I might add, that none of these retailers are ‘Trying to shut the internet commerce window’ as you so eloquently put it, most have online stores in a bid to keep with current/future trends, are you aware of this LOL???? A lot more Australian retail jobs will be shed (as has been seen in recent years) as more and more people shop online and businesses re-structure. I think the same think will happen to other retail/service industries in the near future (for example, AUSPOST franchise agents, Banking agents etc except in country/non-metropolitan townships), with these services being relegated to major business centres/hubs, weeding out small retail outlets for the sake of business efficiency and the bottom-line.

    There will still be a certain ‘basket of goods’ which people would rather physically see/purchase rather than buying online….I think you fail to mention the number of goods which are purchased online which, when people receive them, fall below their expectations (damamged goods, incorrect size/colour/type etc). You’ve only looked at one side of the coin in your response. It is more of an inconvenience for purchasers to deal with sellers via email, having to re-package goods, go to a post office to get it sent back to the seller for exchange/refund (sometimes at their cost), having to wait on postage time to receive it back, blah blah blah. This is as opposed to someone buying something from a retail outlet, and being 100% satisfied with what they’re buying. If something is not up to scratch, jump in the car and go back to the retailer, and the matter is resolved in hours, not weeks. Doesn’t apply to all goods purchased online, of course.

    My 2 cents

    Reply

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