STATES BACK NEW ONLINE SHOPPING TAX
Right now when you go online and order goods from overseas that cost under $1000, you pay no tax.
But this could be about to change.
If NSW Treasurer Mike Baird has his way, your cushions, your jewellery, your shoes, your bargain American perfume – anything worth more than $30 – would be subject to GST. And Baird has just won support for this idea from Victoria, South Australia and Queesland.
That will mean millions of online transactions will pour money into Government coffers which, according to Baird, could be used to scrap other taxes like stamp duty.
Baird’s call comes hot on the heels of the Federal Government report released yesterday recommending the lowering the GST-free threshold from $1000 to $100. Both Britain and Canada have a threshold of $30.
Baird wants to drop it further to $30; some retailers say the threshold should be dropped completely.
As every week seems to brings news of another retailer biting the dust – this week it was fashion chain Ojay – the review suggests such a move will help level the playing field for Australian retailers.
Margy Osmond of the Retailers’ Association told ABC radio today that the Government needs to act urgently.
“The last thing we need now is another endless discussion about this,” she said.
“It is about money that would flow back to the states for hospitals and schools and roads.”
David Mendels, managing director of clothing importer International Fashion Group told The Age he wants to scrap a threshold altogether: “I don’t think you are going to have a retail industry in Australia,” he said.
“I reckon 35,000 jobs can be lost at retail wholesale and distribution in the next nine months.”
The proposal hase received lukewarm support from the federal government and the opposition .
No wonder. With an election looming, it’s a proposal that could really cost votes.
What do you think? Will this actually help local business or is it revenue-raising pure and simple?
Will this affect you? Will paying GST on imported merchandise change your online shopping habits?
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29 Responses to this article
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Amanda September 7, 2012
Cash grab. Why should we pay tax on overseas purchased goods in Australia. It will not save local retailers anyway. I shop online mainly because I can find well made quality clothing in my size, amongst a plethora of choice not offered locally, and at a fraction of the cost. GST will not change that, but I will resent it and the politician who dares to impose it. The few Australan designers I do patronise, like Mela Purdie and Leona Edmiston do not snub women who dare to be greater than size 14, but honestly they are pretty expensive compared to American brands. Cosmetics are another rip off area- I recently purchased some over the counter prescriptives cosmetics, that had seen something like a 30% reduction in the local price to match US pricing as i was told they were losing local sales. Stopping price gouging of Australians and greater choice is what is required, as well as improved service, but I don’t think local retailers are able/ willing to do this
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Janet Georgouras September 7, 2012
Already the banks are cashing in on online shopping with their extortionate exchange rates, if the state governments get in in the act as well, people will not be able to afford to choose to shop online.
Shopping online makes the world a smaller place, where one does not have to catch a planeto find something different or is able to advertise and distribute their goods quite simply across the globe.
It is stated that Britain and Canada have such laws, however it is much simpler to travel away from Britain and Canada to do some shopping. In Australia, we are far more isolated.
Rather than penalising us for our isolation we should be embracing the new internet economy because it allws us access to markets that we have only been able to dream about before.
Tax the wealthy instead. -
Jessica September 7, 2012
What I want to know is how come even retailers can do it so much cheaper overseas? Why shouldn’t our retailers have to keep up? And if they want to blame it on their overseas suppliers or taxes or whatever other straw they can clutch at, why aren’t they battling the cause as a group, rather than turning to customers and demanding THEY pay the difference.
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Robelen Bajar September 7, 2012
Australian retailers are way behind the eight ball when it comes to online retailing and retailing in general. The range on offer is limited, the prices too high and customer service is non-existent. Why should consumers suffer for it? If retailers want a greater share of our wallets, they need to innovate. Quickly! Give me an unforgettable experience when I walk through your door. Offer me an exciting range. Charge me a reasonable price. Australians are being ripped off and they know it, hence we go online.
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Fred September 7, 2012
I recently bought a pair of shoes that sell here for $150 for $82, including P&H, from the US. Even with GST added, I would still be better off buying online. Until something is done about the huge price differentials on many items, I don’t think lowering the GST free threshold will make much difference. I would rather buy online and pay the GST than go into a store get indifferent service and pay a high markup.
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Glenn September 7, 2012
Why When many honest hardworking people in small to medium business are out there paying over the top rents on shop space and tax`s on pretty much everything except the occasional burp or fart should others get a free ride .
Ok , we as the public of coarse are our own worst enemy`s and will always gravitate towards a bargin , but we need to remember that small to medium business still employs 80% of our workforce and we should always do what we
can to look after that .
None of us like paying tax , but hey I think the best way to protect this beautiful life we live is give our Aussie company`s a level playing field (Pass Go collect your $200.00) .
I for 1 love this line of thought from Mike Baird and can only hope we start trying to protect many more sections of Aussie industry in different ways as we go along . Heaven forbid we all started buying Australian made products or atleast buying from our Aussie shops again .
Although as I write this another Bunnings , Masters , Coles or Woolworths has been erected a block away from the last (What ever happend to our Individuality hey )Glenn
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Janet Georgouras September 7, 2012
I also run a small business but I think that if there is any advantage to globalisation it is being able to travel anywhere, speak to anyone and go to market where we wish.
I like being able to have access to those markets. If you pay too much rent, find a premises in a place where you do not line a landlord’spockets and use the online facility yourself. Make yourself competitive.
Paying GST is not going to stop market monopolies like Woolworths (which also owns Bunnings). That is the bad side of globalisation. Online shopping helps us fight those rents.
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cavvygreen September 7, 2012
Perfect example of what you get when you vote the money grubbing Liberal party in.
On another note, I wonder how many sacked Queensland public servants are regretting voting in the Liberal party. -
Amanda September 7, 2012
Glenn, no one is going to pay over 100% more for a product to preserve a feel good relationship with retailers.The retail economy is changing, markets have gone online, and Australia needs to catch up. Applying taxes to make local businesses look more competitive is simply modern protectionism. incidentally, I actually think small business is in a better position to survive as they are more adaptable, able to market to niche markets and provide choice and customer service and a great experience. I think this competition is going to force Australian retailers to cater to their customers. Right now I can’t remember the last time I went into DJs or Myers, they never seem to have anything I want or that fits or suits me, or is decent quality for that matter. I agree retail rents and costs here are too high, that is what government should be looking at, rather than propping up the status quo
. -
Eddie September 7, 2012
I think rents have a bit to do with it. My Natropath and my hairdresser are moving due to their outgoings. I’m following them.
For clothes though, I’m hard pressed to find many items in many shops that are ‘Australian made’, that are quality & i like, so purchase online.
If I need help … Ie shoes for kids, I’ll shop local, but more often than not they need to order in as the stock is not in store.
I’m not sure what the answer is. I think the government slugging GST on items that weren’t generated in Australia is drawing a very long bow. For the Aust leg of the delivery,… maybe.
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Frankly Feisty September 7, 2012
So I can get ASICS runners for $68 online and $180 in a store here. We are low income earners. Which will I choose?
I’d much rather buy and support local, but our manufacturing industry is pretty much dead, thanks to businesses taking their manufacturing processes offshore, TO SAVE MONEY.
I love the fact that old schools green grocers are making a come back and many new retailers are setting up small, artisany type businesses, focusing on giving the customer what they want, not in large, soulless shopping malls but in old fashioned, street, strip shopping centres.
The interglobe is here.
You can’t put toothpaste back in the tube…HORSE BOLTED. Someone will find a way around a tax if it gets the go-ahead.
Retailers need to LISTEN to what we are all telling them: Sell us what we want to buy; don’t mark up 500% or even more; provide brilliant, attentive, informed, customer service; TRAIN, respect, encourage and reward your staff; provide A1 follow-up service for any problems. Oh and shopping centre owners need to stop locking tenants in to insane rental agreements. -
Melinda September 7, 2012
Jobs will be lost ???? Maybe some of those indifferent sales assistants that are more comfortable in front of a computer than talking or serving a real person, can process those online orders, pack them up and send them out. Online is the way of the future people and it is only a matter of time before the big guys like Westfield start investing more in warehouse space and moving with the times too. As for GST on overseas purchases, it will not stop people from buying overseas rather than in their own back yard if the choice is not available and the price point is too high.
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Harriet September 7, 2012
The last couple of relatively expensive online purchases I made were for shoes – both of which actually came from AUSTRALIAN internet retailers – why did I not purchase locally? That would be because neither of the local stockists stock half sizes, because apparently there’s no need for them, nobody buys half sizes. Both pairs of shoes arrived within 2-3 days, customer service was wonderful unlike my local store who bent over backward to be as difficult as possible (one shop going as far as to tell me they don’t make a particular shoe in half sizes – while I was wearing a pair at the time!).
Make-up is ridiculously priced though – Why should I have to pay up to 50% more for a product that I can purchase online? It’s an identical product, and even allowing for the cost of getting it to me in Australia, I was still well in front.
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Glenn September 7, 2012
As much as in some sort of perfect world I`d love to see everything made and grown here (which is just about possible) the realism is that our great life style has meant that labor costs are most of the time to high to produce .
So really we have no choice but to import , which not be to hypercritical I do import some product myself . However if importing is the way , it`s when the items get here that we need to control and keep even . Things such as tax and quality control if paid by one should be paid by all . The country does need a certain amount of funds to maintain this pretty good joint at the end of the day.
As much as getting a piar of shoes at $50.00 less online and dodging the GST may feel like a win , the tax will need to come from some other aspect of your life. Sucks I know , but freedom in the western world costs.
Support our small to medium businesses , markets sellers and restaraunts , the good guys doing the right thing need our support.
Glenn
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Carole September 7, 2012
I’m amazed the government have allowed this to go on for so long. GST should be paid on all online purchases. It’s crazy to allow so many small businesses to be destroyed. Small business employs the highest percentage of people in this country, not mining.
If you think rent is the only overhead you have pay in retailing you’ve obviously never been in business of any kind.
Try these costs for starters —
Rent
Insurance ( public liability/ stock/ fire/glass etc)
Electricity
‘Phone / Internet
Legal expenses
Accounting fees
Data entry for bookkeeping and BAS statements
(you must collect GST for every transaction and prepare BAS statement for the Tax Office every 3 months or you will be fined – you will do this work for the tax office with no compensation)
Banking fees
Merchant fees
Overdraft fees
If you are Importing you will pay up to 3 months in advance for your product.
Wages
Superannuation. and. On. and. On & on
and you think your being ripped off if the Retailer makes a profit!!!!!!!!!
By all means buy online, get the best price , the GST is only 10% and should go into government coffers to pay for Schools/ Health / Roads etc. etc. -
Glenn September 7, 2012
Beautifuly said Carole !!
Many people think that Owning Small to Medium business is all wine and roses .
The reality is though the wine and roses come with alot of hard work patience and persistance . Lets be thankfull that so many people still want to go down the path of the dream ( owning a small to med business) despite all of the obsticles .
Small to medium business owners take so much pressure off the econemy already as they are normally never scared to pay their own way and not rely on the public purse.How about we all remember what the great Aussie dream was about and support our Sm – med companies in numbers .
Glenn
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the*sparrow September 7, 2012
Carole and Glenn – surely all retailers, not just Australian ones, face similar costs of doing business? We the buyers are perplexed that so many items cost twice as much in Australia as elsewhere, and we will go elsewhere. Money talks, always did and always will. Sad but true.
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Frankly Feisty September 7, 2012
All the online businesses will still have all the usual business costs mentioned. (AndI am aware of all the costs as I have had my own business) the only differences are online businesses have warehouses replacing shop fronts and added packaging costs, yet they can still make a profit.
No one wants to see small business people not make a profit for their hard work and NO-ONE has said that.
Think of new ways of doing things.
Listen to what the public want.
Service. Supply. Quality. Fair price.
$120 difference for a brand name pair of sports shoes is NOT acceptable.
Not knowing your product is NOT acceptable.
Telling customers things are not available when they know they are is NOT acceptable.
Retail has always been tough and a real shape-shifter of an industry. Those who make it, are the ones who give customers a great experience that they then tell others about.
Pure and simple. -
the*sparrow September 7, 2012
I have no problem paying GST on my purchases from overseas web sites. As others have pointed out, 10% is negligible compared with the savings made when shopping from outside Australia. Not to mention the far greater range of products and sizes. This move will help NSW balance their budget, but have little or no impact on the numbers of people who shop online.
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Rhoda September 7, 2012
I don’t particularly give a hoot about the big retailers because they care less about me and their other customers. Have been shopping lately for a couple of things in particular and can tell you the big stores like Myer give no service whatever. Myer and DJs – words fail. You have to dress to the nines and wear as many rings as staff do before anyone will deign to look your way. Truly I could do a sing and dance routine at the bottom of the elevators and staff would go on pretending they are busy. Makes my blood boil. They are the last places I go for anything now. I was in the Apple Store recently and staff there could give lessons on sales etiquette.
So yes I’m shopping online as much as I can and until Aussie retailers get their act together. We are at the bottom of the world and isolated and everyone seems to be taking advantage. Far as I’m concerned they can get lost or pick up their act.
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Donna September 7, 2012
I own a small retail fashion business but still buy on line for certain products. When I hear news such as Ojay going under I am not surprised. An Inferior overpriced product made in china with no individuality just dosent cut it any more. Yes times are a changing and some companies are just dinosaurs living in the past.
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Simon September 7, 2012
It’s nothing to do with collecting $3 GST on a $30 item (which probably costs $60 in the shops anyway). It’s all to do with making tens/hundreds of thousands of people have to queue up in busy post offices across the country to pay $3 in order to collect their goods. The queues will be insane, it will probably deter many people from online shopping, and retailers hope this will drive people back into their stores. Well, it won’t, because I’d rather do without.
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BK September 7, 2012
in order for Australian retailers to be more competitive, their prices must be reasonable but it is near IMPOSSIBLE to reduce their prices without going bankrupt because of the following as per the Centre for Independent Studies Report:
“In a recent survey of international retail space rents, Sydney’s Pitt Street Mall (US$901 a year per square foot) beat the prestigious Champs-Elysees in Paris (US$873 a year per square foot). Sydney is also more than twice as expensive as the Los Angeles Rodeo Drive (US$425) and almost seven times more expensive than Auckland’s Queen Street. In fact, Sydney CBD was beaten only by the top retail locations in New York, Hong Kong, London, Zurich and Milan.”
AND…
“In fact, quite a large share of Westfield’s Australian operations is not in prime CBD locations but in the suburbs. So the question has to be: Why are rents in Westfield’s centres still so expensive? How can the average rent in an Australian Westfield centre be broadly equivalent to some of the more expensive US prime retail locations like Miami’s Lincoln Road?”
and there you have it folks….the reason why Australian retailers have no choice but to have higher prices than their international counterparts….The higher prices are due to higher fixed costs.
its the government’s own restrictive planning/zoning regulations causing this predicament, and they plan to increase Australian retail industry’s competitiveness through more taxing???!!! wtf SMDH….
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BK September 7, 2012
…Cont…
So basically Australia has 1) overpriced land…and that’s trickling down to 2) overpriced ‘everything else’….i just wish everyone knew that retailers arent out to rip off everyone…its the major banking fund/asset management companies and property divisions of the large financial institutions that own/manage most of the retail space and rent them out to businesses…they are ripping off the retailers and this trickles down to higher prices for average australians -
Angela September 8, 2012
If anyone knows of a petition I can sign against this money grabbing proposal, let me know. Once again this country chooses to punish, rather than find solutions to help us compete on a global level.
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Susan September 8, 2012
I shop online as it is so much cheaper, convenient and the service is wonderful.I live in regional Oz which means a total lack of choice and so online shopping has been a godsend. I would happily patronise local shops if they had what i needed, were reasonably priced and above all provided some informed, polite and helpful staff. In our local CBD rent is so exorbitant that several retailers moved to Sydney as the rent was cheaper and easy to meet due to increased turnover. Any increase in GST for online purchases will not fix the inherent problems of retail in Oz.. Retailers of all shapes and sizes need to take a long hard look at themselves, their business models and above all listen to all the comments about the way they treat customers. In many cases they are their own worst enemies. And 10% GST is a pittance when compared to the savings i make with online purchases.
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Jenna September 9, 2012
I don’t mind paying a gst on imported goods, but to ask me to believe that revenue will be spent on schools and hospitals is a bit far fetched.
The Australian government needs to do something about the pricing of products in Australia. Apple is a perfect example. We pay so much more (in the case of an iPhone, Americans get the new iPhone 4s for 199 when we pay at least 649) than any other country and our dollar is not that weak! Why? The government can keep their money off extra tax until they start keeping promises- if it all went to the dental fund and they started a proper mining tax, high income earnig tax and delivered on their promises the way O’farrell has delivered on his promise to ruin public services in nsw then :p -
Carole September 10, 2012
@The sparrow
maybe you might consider this
Australia has a population of approx. 22 million
America has a population of approx. 260 million
As an example of why it costs more in Aust.
It goes like this. : because of Aust. small population , I might import 10 containers of a particular product, my American counterpart will be able to import 100 containers of the same product because obviously they can sell more to a larger population.
Soooooo it’s obvious isn’t it , the person buying 100 containers is able to bargain for a much better price.@frankly feisty
I disagree re costs of retail versus warehousing, there are several but the main one which you have failed to factor in is THEFT , by the low life who have given themselves permission to steal from other peoples hard work@Jenna
Tax is the very reason that we have Hospitals Schools Roads Parks etc etc
Without taxes we would not have such a wonderful country with excellent services.
