Retailers want online tax threshold cut

Whacking a new tax on goods bought online from overseas retailers isn't a quick fix to the problems facing local businesses, the federal government says.

A group of Australian retailers wants the government to level the playing field by charging foreign retailers the GST on cheaper goods or, alternatively, scrapping it for everyone.

At the moment no GST is imposed on goods bought from international websites for less than $1,000.

The campaign, backed by Myer, David Jones, Harvey Norman, Target, House, Borders and Angus & Robertson among others, began on Tuesday with full-page newspaper advertisements.

But Assistant Treasurer, Bill Shorten, says goods sold on the internet are often between 30 and 50 per cent cheaper. The GST is just 10 per cent.

"So I don't accept all of the arguments that the big retail end of town is running," he told reporters in Melbourne.

"I don't see the argument which says that retail will have blue sky if we slap a tax on the customers ... to discourage them from shopping online."

The federal government has asked the Productivity Commission to inquire into "the implications of globalisation on the Australian retail sector".

Acting Attorney-General, Brendan O'Connor, said the commission was due to report back in nine months and the government wouldn't "rush to judgment" before then.

"We understand retailers are doing it tough," he told reporters in Sydney.

"(But) that's mainly due, I think, to the rate of the Australian dollar, the exchange rate and also, no doubt, as a result of the effects, of the lasting effects, of the global financial crisis."

Billionaire retailer, Gerry Harvey, says many businesses simply can't wait for the Productivity Commission to do its work.

They're likely to go broke over the next three months which means the government must change the tax now, he said.

"This has been given to the Productivity Commission which is going to take nine months ... We can't wait that long.

"For many retailers this is a case of life or death."

The general manager at upmarket retailer David Jones, Helen Karlis, said local retailers would be prepared to compete on price if the GST inequities were removed.

"If they remove GST from us, then we will happily compete on price," she said.

But consumer advocacy group, Choice, described the retailers' campaign as an "alarmist red herring" driven by self-interest.

"This is not about GST," spokesman Christopher Zinn said, noting that a camera sold online by Myer for $557 could be bought from Hong Kong through a company with Australian-based staff for $346.

"Major stores are not being forced to charge these high prices.

"This debate is about quality of service, competitive pricing and the inability of some retailers to understand the future of internet shopping."

Zinn implored customers to look online and "be surprised how much money you can save".

Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

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