Consumer advocate CHOICE says a lower GST threshold on imported online goods would not only mean extra costs for shoppers, but delays in delivery.
The nation’s treasurers are being urged by consumer groups not to be too hasty in lowering the GST threshold, and therefore increasing the cost, on foreign goods bought online.
Federal Treasurer Joe Hockey will host his state and territory counterparts in Canberra on Wednesday at his first Standing Council on Federal Financial Relations.
High on the agenda will be the GST anomaly that means goods less than $1000 bought online from overseas companies are not subject to the 10 per cent consumption tax.
Australian retailers want to see a more level playing field by having the threshold lowered to $20, while the states and territories argue they are missing out on much-needed GST revenue.
Queensland Treasurer Tim Nicholls says most other countries have a much lower threshold.
He says state treasurers asked the former Labor government to consider a change eight months ago, but it put the issue in the too-hard basket.
However, he said Mr Hockey had indicated he was “very willing” to discuss the issue.
“What we’re saying is that it really does disadvantage Australian retailers and suppliers, because if you want to buy here in Australia you have to pay the GST irrespective of price,” Mr Nicholls told ABC radio on Tuesday.
But he concedes there could be some issues around the cost of collecting the tax from overseas companies.
Retailer Harvey Norman chairman Gerry Harvey described the GST exemption as “a rort”, saying it was out of control three years ago and “now it’s totally out of control”.
He is confident the ministers will agree to the move.
But consumer advocate CHOICE believes consumers and the economy will suffer from what it labels an “internet tax” designed to prop up parts of the retail sector.
If the threshold were lowered to $20 and Australia adopted the UK’s assessment process, CHOICE says the cost of a $20 parcel would rise to more than $35.
The UK Royal Mail charges a STG8 ($A13.60) fee for assessing a parcel for VAT and customs liability.
“If you lower the threshold without streamlining the process, you turn every parcel delivery business into a doorstep tax collector,” CHOICE director of campaigns Matt Levey said in a statement.
CHOICE research shows only 12 per cent of shoppers use the internet to escape the GST, but the majority do so to be able to shop at the hours that suit them or for the convenience of getting products delivered to their door.
Wednesday’s treasurers’ meeting will also consider productivity, infrastructure partnerships and the economic and fiscal outlook.
Reserve Bank of Australia deputy governor Philip Lowe told a conference in Sydney that infrastructure investment could help improve productivity.
“While our exports are set to grow strongly, we will need to lift our rate of productivity growth substantially if we are to continue to enjoy the type of increases in our living standards that we have become used to,” he said.