The government’s long-awaited crackdown on Australians shopping overseas has arrived, with the Treasury Laws Amendment (GST Low Value Goods) Bill 2017 introduced this morning into Parliament.
The bill is the result of a long campaign by the Australian retail oligopoly frustrated that consumers were avoiding high prices and shoddy services by shopping online on foreign sites. It imposes GST on all purchases offshore, including intangibles such as music, books and software, with the onus on offshore firms to remit GST to the Australian government.
State governments also supported the bill, convinced that they were being dudded of hundreds of millions of dollars in GST revenue — a fantasy retailers were only too happy to encourage.
In a 2012 report for the National Retail Association, “independent consultants” Ernst & Young claimed that $400 million in GST revenue had been lost in 2011 alone, and that nearly $1.5 billion would be lost in 2015; this would rise to a staggering $2.4 billion per year in 2021.
A more sober assessment by the Productivity Commission found that lowering the imported goods GST threshold from $1000 to $20 would reap about $550 million a year — but that would be dwarfed by enforcement costs of $2 billion.
As part of the bill’s tabling, a fiscal impact statement was provided that shows how much the government expects to obtain from the measure. The statement confirms what Treasury had already flagged previously in the 2016 budget — the alleged revenue loss is nowhere near as big as the retail oligopoly and the states made out. How much will the bill reap in extra revenue? Plainly not the cornucopia of $2.4 billion a year — but what about $1.5 billion a year? $550 million a year?
Try $70 million in 2017-18, $100 million the following year, and $130 million the year after that, for a grand total of $300 million over three years. And the Commonwealth won’t see a cent of it — it will all go to the states.
That Ernst & Young report also warned that:
“… with the rapid growth of online retail and the bulk of this growth expected to accrue to overseas retailers, around 118,700 traditional retail jobs in Australia could be lost to the online sector by 2015. This equates to a loss of one in 11 jobs in the traditional retail sector.”
According to ABS industry employment data, between when the report was written in 2012 and the end of 2015, employment in the retail sector grew by 85,000 in trend terms.
Still, at least Gerry Harvey and his mates will be happy.
Wouldn’t a VPN (?) service get around this anyway, or one of those measures whereby people get American Netflix content using those services which make it appear that they are in USA. Goods then shipped by mail as ‘gifts’ wouldn’t be caught up in this crackdown. It’s like the claims that the GST would destroy the black economy, while anyone with a brain understood that it would provide a further incentive.
Some VPNs get around things like American Netflix, many (most) don’t. Netflix recognises the VPN IPN addresses and blocks them. Amazon block overseas transactions by working from the credit card numbers, which identify the country of origin.
Big capital can move freely around the world – hell, it can bankrupt countries!- but little capital in Oz that wants to buy a self groomer/scratcher cat post thingy from Amazon in the US because it’s twice as much here even with the exorbitant US postage fees? Not so much.
Dog’s Breakfast, may be right about a VPN, and sending something as a gift. What I find even more brainless is what is the enforcement cost? If the PC reckons its $2bn, whats the point of raising $70-$130m per annum? Even if enforcement is much less it’s hard to see how it could cover what it raises. If that’s right this is yet another act of a government in the hands of the Coal, Mining, Gas, VET, Childcare and now Retail industries, making deals that lose us all money except their donors. I am also concerned that unscrupulous overseas vendors will levy 10% on Aussie orders and not remit it. Who’s going to make them? The ATO and whose army!
This is wheel full circle and then some. A bit over a decade ago I was buying some gear from the US. Between 2 shipments the costs to import changed and when I inquired it was because chasing tax or other for purchases under $1000 cost more than was earned. So no GST or custom charges for items under that amount until now.
The amounts must have changed in that time (for the worse). But we must do our donors bidding 🙁
There is but a faint hope that the senate will vote down this poor excuse for a money bill on the basis that it is revenue negative and unenforceable.
Customs is well used to dealing with commercial entities O/S sending parcels marked “gift” and dealing with them, Villeroy & Boch being the prime example.
The $1,000 threshold before tax is payable, a sensible saving of resources, does NOT apply when Customs deems that ‘deception/misdescription’ is intended.
As usual though,the BigAr$ed end of town rools even when the effect is negative on the common weal.