Aug 20, 2013

GST lost to online imports isn’t the problem. This is …

Retailers' arguments that we should impose the GST on online imported purchases ignore the point that other, more obvious GST fixes will yield far more money. Glenn Dyer and Bernard Keane report.

There was a lot of publicity this morning for the Australian Bureau of Statistics estimates of the value of goods brought into Australia under the $1000 limit for GST. The $6.226 billion estimate for the 2011-12 financial year — it’s the first time a figure has been estimated — drove much of the publicity because it is large.

But it’s a red herring. The bigger problem with the GST is the tax-free nature of food and groceries, not imports from offshore. That’s the revenue black hole, by an order of magnitude more than 10 times greater than the GST lost to imports under $1000.

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11 thoughts on “GST lost to online imports isn’t the problem. This is …

  1. Colby Hanks

    “When he was the very hands-on CEO at David Jones…”

    Is that what DJs said when they fired him – too hands-on? 😛

  2. chpowell

    5-6 billion pa in additional tax? Could this be any more ultra regressive?

    Here’s an alternate idea: get the Us tech co’s, GOOG, aapl, Oracle, HP and Microsoft to pay at the 35% rate for profits arising in Australia. For example, GOOG alone would pay $350M (versus the $74,000 quoted by the SMH)

  3. Suzanne Blake

    Adding a GST on ood, will impact low income people more than high income. It will NEVER happen. Political suicide.

    Same with health and education.

    The cost to collect GST on imports is higher than what is collected.

  4. Lannie

    I expect we will see the GST exemptions on health and education go, mostly because it hasn’t been mentioned in the campaign.
    I hope we don’t see the exemption on unprocessed food go – those who are trying to make the last dollar stretch a lot further by buying at the supermarket and cooking at home will be really hit by a 10% increase in costs. Those who are doing well are all ready eating out a lot, and thus paying the GST.

    But I’m with chpowell! Make the multinationals pay their fair share!

  5. Circus Taximus

    If we closed a few loopholes on capital transfers for foreign-owned companies, increased the mining tax to where it should have been, and tightened up a few other little areas where salary and wage earners are effectively cross-subsidising barely legal tax breaks for companies with clever enough tax accountants, we’d be, relatively speaking, in revenue clover without even having to worry about tinkering with GST or wringing our hands over low-value importations.

    Not that putting GST up by 2% would hurt that much, especially if they leave food and medical goods alone to cushion low income earners. Our rate is really very low by international standards.
    And it’s so much easier to screw the consumers: so my money’s on a rate rise within the next term or two, no matter who wins.

  6. Ben N

    I wouldn’t mind seeing GST apply across the board, would certainly make life easier in business… Ran a small business for several years and the current system is a real pain. Maybe hand back through tax benefits to make up the shortfall in low income families?

    The only other viable alternative I can see is scrapping the GST and move towards a tax on transactions. Make sure big business pays its share.

  7. Mark from Melbourne

    Well yes and no. No doubt food is an interesting discussion to have but why invalidate the other? It’s not just the money that would flow from the GST but it would also no doubt strengthen the retail sector in Oz, provide more jobs, income tax etc.

    And I speak as someone that buys online all the time.

    And surely there must be a clever way of collecting GST on imports that isn’t so expensive.

    In the US, the retailer has to collect the state tax at time of purchase and submit to the State in question. Cant be that hard even if you only big up the major websites like Amazon, ebay etc.

  8. gapot

    Tony ABBOTT might like to have another look at taxing the churches. If he wasn’t such a bible basher he could get them to pay tax on their businesses which are given an unfair advantage compared to the private companies which compete in the same businesses.

  9. Col Pot

    So, Crikey advocates taxing food for everybody to fund a windfall for obscenely wealthy blowhards and overseas companies – which is what the abolition of mining and carbon taxes amounts to.

    No wonder I’m not spending much time here any more.

  10. Aidan Stanger

    Broadening the base of the GST to include food etc won’t get rid of the competitive disadvantage our retailers are at.

    Applying GST to imports would, but would be costly to administer.

    Abolishing the GST would be a much better solution, though of course other taxes would have to be raised and/or broadened to compensate.

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