Why Ebay, Amazon and Alibaba are really against the new GST law

Internet Retailing

1st May 2017

By Peter James Ryan

According to newspaper reports Ebay, Amazon, Alibaba and other major global e-commerce brands are threatening to geo-block Australian consumers from purchasing products on their websites if the Australian government introduces compulsory GST collection on all purchases – extending the application below the current AUD$1,000 threshold.

If that is true and they are trying to use media pressure to force the government to back down on the application of a domestic tax policy that every Australian abides by, then I for one would be happy to be geo-blocked.

The real issue here – in my opinion – is that none of these global players want to register into a tax system and leave themselves open to compliance audit. They clearly don’t believe in paying their fair share of tax – anywhere.

However, in the United States in many regional jurisdictions they are already subject to local, state and federal sales tax. Australian consumers are already geo-blocked from purchasing many products and services.

And regardless of whether you think the methodology that the Australian government is using is convoluted and clumsy, the computer code it takes to levy and comply with the GST charge is no more complicated than that used to recoup credit card fees.

For technology geeks who claim to be the smartest people in the room to cry that they cannot comply is simply a lie. They don’t want to comply.

If global e-commerce players paid all the taxes that Australian retailers do, then their prices to consumers would most likely need to increase by at least thirty per cent to maintain margins making them line ball with most Australian retailers for everyday pricing.

My belief is that the world is getting increasingly tired of global businesses, which use the addiction of short sighted consumers to ‘cheap price,’ to blind domestic economies, to the long term negative impact of tax revenue loss, employment loss and balance of trade blow outs.

Increasingly we are seeing in electoral results around the world, that voters want their economies to function in a way that delivers true quality of living increases at the domestic level and they are sick and tired of governments letting global businesses get away with paying little or no tax while their personal tax rates are high.

Global e-commerce brands are among the worst offenders in my opinion.

There is no doubt that they bring many, really good and positive things to consumers and that the competition they bring in many areas improves retailer performance. But they must be made – by every government in the world – to play by the same rules that domestic retailers do or they should be blocked by us. Not the other way around.

Nobody is saying that global online retail should not be allowed. But we either have a taxation system for all or taxation system for none. And those that don’t want to comply fail the citizenship test.

This story first appeared on our sister site, Inside Retail Australia. 

Peter James Ryan is head of Red Communication and can be contacted on (02) 9481 7215 or at peter@redcommunication.com.