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Expert doubts GST could be imposed

UNSW associate professor, Frank Zumbo, says "adding a 10 per cent GST on imported products under $1000 will not change consumer buying habits"

A tax expert doubts whether the Federal Government will be able to find a cost-effective way to collect GST on goods purchased online from overseas websites.

A group of big retailers, including Myer, David Jones and Harvey Norman, wants an end to the GST exemption for imported goods worth less than $1000.

The government is not moved by their argument saying a tax on consumers is not the best way of competing with overseas online retailers.

In any event, the cost of collecting the tax outweighed what tax revenue would be raised, Assistant Treasurer Bill Shorten maintains.

Frank Zumbo, an associate professor within the School of Business Law and Taxation at the University of New South Wales, agrees with the government.

"The government is rightly concerned that it will face the uncertain and potentially escalating cost of trying to collect nominal amounts of GST," he wrote on the The Drum website on Thursday.

Prof Zumbo said GST was not the issue.

"For starters, adding a 10 per cent GST on imported products under $1000 will not change consumer buying habits where the savings online can more than offset any GST that may be imposed," he wrote.

In some cases, Australian consumers were able to go online and purchase the same product overseas for anything between 20 and 50 per cent less than they could locally.

"It's clear that consumers here are much better off buying overseas even if GST was added to the imported product," Prof Zumbo said.

"That, of course, assumes that the government could find a cost-effective way of imposing the GST on imported products of less than $1000."

There were greater challenges facing Australian retailers, especially smaller retailers, Prof Zumbo said.

They included escalating retail rents in shopping centres and the increasing cost of doing business in Australia including higher interest rates and electricity costs.

Prof Zumbo said the "noisy" big retailers should fully embrace online retailing rather than being critical of its growth or solely targeting the GST issue.

Their campaign was clearly self-centred and should not be allowed to undermine consumer confidence in online retailing, he said.

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More about: Bill, David Jones, Federal Government, Harvey Norman, Norman, Norman, University of New South Wales, University of New South Wales, UNSW

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