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Research backs taxing online goods

Retailers call on Aussie government to apply the GST and import duties on goods bought overseas online

There are strong grounds for lowering the tax-free threshold on products bought online from overseas but scrapping it altogether is not worthwhile, the Productivity Commission says.

In response to growing financial pressures from the increasing popularity of online shopping, retailers have called on the federal government to apply the goods and services tax (GST) and import duties on all goods bought overseas online.

Currently, no GST is imposed on goods that are bought from international websites for under $1000.

In a draft report into the structure and performance of Australia's retail industry released on Thursday, the Productivity Commission agreed that the GST should apply equally to all transactions.

But in its recommendations it said the government should not lower the threshold until it is cost effective.

In other words, the revenue from the tax needs to exceed the cost of collecting it.

"Almost all countries have some threshold beneath which they do not attempt to collect taxes and duties because of the costs of collection," the commission said in its report.

The report goes into some length analysing the challenges posed to traditional retailers by online shopping, both domestically and overseas, but offers just one recommendation to deal directly with the issue.

It calls for the Australian Bureau of Statistics (ABS) to collect more detailed data on how Australians are shopping online.

The commission suggests the ABS provide data on the levels of employment in online retail, and break down the amount spent on online retail to differentiate between traditional retailers with online stores and retailers trading solely online.

Another recommendation is for the the complete deregulation of trading hours in all states and territories, including on public holidays.

"In today's more competitive retail trading environment, where consumers have greater access to goods from all over the world and can order those goods any time of day, there is a greater imperative for retailers to have the ability to respond to changing consumer tastes and preferences," the report said.

Treasurer Wayne Swan said the government would take its time to consider the recommendations.

He said the federal government would consult with the states in considering the recommendations, as they had a large stake in GST payments.

Swan added that many retailers were experiencing much lower sales, not necessarily because of online purchases, but because consumers were not spending as much.

Other recommendations relate to land zoning and workplace regulations, addressing concerns about cost and competition barriers in the retail sector and the productivity of its employees.

The retail sector employs about 1.2 million Australians, or 10.7 per cent of the workforce, and generated 4.2 per cent of the country's gross domestic product in the 2009/10 financial year.

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

More about: ABS, Australian Bureau of Statistics, Productivity Commission

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