Harvey Norman’s Chief Executive, Gerry Harvey believes a taxing online goods purchased offshore will quell local consumer’s desires for international products. While the Federal Government needs address the issue, a GST isn’t the answer.
The man who famously claimed that online shopping was a dead-end and would not make any money for entrepreneurs, is now so concerned about money being spent by Australian consumers on overseas online retailers, that he is demanding the Federal Government quell the international online uprising by slapping a tax on it.
Gerry Harvey, Chief Executive of big box retailer Harvey Norman, is calling for the Federal Government to put a goods and services tax on products purchased from overseas online retailers.
Harvey believes local retailers are at an “unfair disadvantage, competing against goods from overseas. Local retailers selling women’s clothing, handbags and shoes, as examples, had difficulties in competing against foreign online stores,” he said. “This is a huge problem. If you are in retail, selling those sort of goods, you are severely disadvantaged.”
As the laws currently stand, Australians can buy from international sites and not pay any duty on items under $1000 and Harvey claims that the politicians he has spoken with feel it’s “too hard” to instigate this tax.
While Harvey is right about one thing – the Federal Government needs to address the problem and take notice of the dollars being lost to offshore online shopping – incurring a tax on international goods purchased from these sites won’t solve the problem if local retailers can’t match the user experience of these international websites.
A recent survey of Australian online consumers indicated that the main reason they shopped from international online stores was to buy goods not available locally, while only a small percentage said it was because these sites were cheaper – clearly adding a GST will not deter the majority of online consumers from buying offshore.
Rather, Harvey and his peers should be insisting the government take a deeper look at the Australian online retail landscape and start injecting money into the industry. Put together a governing body. Develop industry guidelines and standards. Educate retailers and grow online retail in Australia in an aggressive manner to give local retailers staying power and a real, competitive presence in the global online arena. Look to how domestic online retailers can capture not only local consumers but international consumers too. It’s been said before and I will say it again, retailers need to be aware that their competition is no longer the shop next door – teach our local retailers to start thinking globally!
It must be pointed out that when Harvey initially declared online shopping was a dead end, he also claimed he wouldn’t spend another cent on his own retail business’ e-commerce interests. Somewhere along the way, Harvey has had to eat his words.
How many more problems would the Australian online retail trade have now if Harvey’s past sentiments had found their way into mainstream industry thinking? There was no reason to listen to Harvey then, and there is no reason to listen to him now. Quite simply, the issue at hand is bigger than Harvey’s current understanding of it and won’t be solved with a tax.