Why do most politicians and policymakers ignore advice from small business people or small business associations? Is it because they see the word “small” and make some sizest assumption on our capacity? Is it because the much fewer big businesses and business associations have more money and so attract more interest? Both those things are probably true, yet people from the small end of town are much closer to the action and are more likely to better inform policy, comment and process.
There are various examples of where we, in small business, are ignored until too late. One example is when we warned policymakers and politicians, for years, decades even, that the dominance by Coles and Woolies would not be a good thing for anyone. They, with their microphobia and macrophilia, told us to go away and do as we were told. As a result we have a major productivity problem in Australia, Coles has been fined for doing what we knew it would do, and Woolworths is now downsizing, causing all sorts of panic.
We have the same issues with the GST and low value thresholds for goods purchased overseas. According to recent statements by the Treasurer, GST will be charged for “intangibles” provided from offshore, including downloaded music, software and e-books. This is a good thing, and will bring much needed dollars into the federal coffers for distribution to the states.
Get Crikey FREE to your inbox every weekday morning with the Crikey Worm.
Some in the Coalition government understand the tax fairness and income collection issue involving GST on overseas purchases and have responded by supporting it publicly — Small Business Minister Bruce Billson and Assistant Treasurer Josh Frydenberg among them.
When John Howard introduced the GST, online offshore sales was a pinprick on the retail landscape. Over the last 10 years, it has become a massive stream as digital disruption has changed the way people shop.
For the last several years, advocates (from small business) for closing the loophole on the collection of GST have been arguing that this is manageable and also fair, but we have been ignored by various governments and their advisers who think we are a bunch of compromised dummies (as compared to Amazon?). One problem is any change to GST collection requires approval from all states, and Western Australia, with its GST preciousness, has been a major stumbling block.
But tangible objects — books, cameras, clothing, sporting goods, etc — will remain exempt from GST for offshore purchases of less than the current $1000 threshold. This will continue to apply until all state governments approve a change, and presumably, for the WA government, this is a step too far. This is not a good thing for federal and state budgets, costing our tax coffers billions of dollars.
As the government now points out, new technologies have reduced the cost of collection of this revenue, and whether it is an impost at point of purchase on credit cards or asking the ATO to target the top 50-100 internet retail providers, there are cost-effective, if not cost-neutral ways of collecting the revenue.
In a belated about-face, according to Fairfax, “Labor’s treasury spokesman attacked the Coalition on Wednesday for ‘turning its back on Australian retailers’ by failing to impose the GST on overseas online retailers”. Good on you, Labor. This is better late than never, but why did you ignore our advice for the last 10 years? You continue to ignore our advice on the effects test for competition policy and you are again wrong, accept you are wrong now rather than wait four more years.
This is not about protectionism for local business; it is about ending an era of protectionism for offshore businesses, large and small. While hundreds of thousands of us collect and pay our fair share of GST governments continue to protect offshore businesses that do not pay tax, do not employ Australians, do not contribute to Australian hospitals, schools, roads and other essential services.
Why do state and federal governments continue to be complicit in allowing small business to struggle — for local economies to struggle — while allowing global businesses to profit at our expense? The day will come when those in power stop listening to cave-dwelling economic rationalists and listen to those at the real coal face, those who are clever, who are informed and need to be listened to. Well done to Billson and Frydenberg, who are doing just that.
Let’s end political point-scoring from all sides of the political fence and get the economy and small business going. Get it together, you lot.