Retailers react to low-value GST decision
Following a Senate committee’s recommendation, legislators have agreed to abolish the GST exemption for imports valued at lower than $1,000 on 1 July 2018, one year after the law was originally due to take effect.
Proponents of the law have said it will level the playing field, since it requires global e-commerce players to charge GST on the same goods as local retailers.
But online retailers including Amazon and Ebay, as well as some senators, have said the proposed model for collecting GST on low-value imports is impractical and have backed a one-year delay to consider other collection methods.
An amendment made to the legislation before its final passage in the Senate on Monday means that is now going to happen.
Under that amendment, the Productivity Commission has been tasked with conducting an inquiry into the implementation of the Bill. It will hold public hearings and will make recommendations based on its findings.
The commission is due to hand down a final report on alternative models to the one currently proposed and any other aspects it deems relevant to the implementation of the Bill before 31 October 2017.
The vendor-hybrid model currently proposed by the Government requires international marketplaces to collect and remit GST from third-party sales on their platforms, which is believed to be unworkable and ineffective by Amazon, Alibaba, Etsy and Ebay.
Those online retailers advocate a logistics model that would see the likes of Australia Post collecting and remitting GST on low value goods. However, Australia Post has said it would be unable to facilitate such an operation.
In a statement to Internet Retailing, Ebay said it welcomed the decision to delay the implementation and consider alternative collection models.
“Ebay welcomes the review by the Productivity Commission. We look forward to working with Government and the industry on methods of implementation that drive revenue, help level the playing field for Australian businesses and maintain choice for shoppers.”
Meanwhile, Gary Elphick, CEO and founder of Disrupt Sports, thinks the implementation of GST on low-value imports is a bad idea altogether.
He previously told Internet Retailing:
“My personal opinion is that it’s a bad thing for us as consumers and it’s not a good for small businesses either. It’s a short-term protectionist measure. Australia is a small country, so why are we hurting our exports? The US and Europe have already said they’ll reciprocate if this goes ahead. And if the US taxes Australian goods, that’s going to be unsustainable for exports. Either [overseas] customers will stop buying them, or the goods will get taken away at border.
“The last bit that really bugs me is the government has already done a study that says this is a loss-making measure. There’s clearly lobbying from certain large organisations pushing this ahead, but I want to make sure the interests of small business are represented too. I actually met with Malcolm Turnbull recently and we had a good balanced conversation.”
According to Paul Greenberg, Australian retailers should focus more on winning their customers back, rather than forcing them back through maneuvers like the low-value GST law.
“We all know from our personal lives that that doesn’t work. Relationships need to be reciprocal,” he told Internet Retailing.
He also cautioned that tax equity is a tricky topic, and pulling one thread can have unknown consequences elsewhere.
“We’re actually going backwards on this. The US, our biggest trading partner in e-commerce, has just upped their tax-free threshold to US$800 (approximately AU$1000).”