The government’s long-awaited crackdown on Australians shopping overseas has arrived, with the Treasury Laws Amendment (GST Low Value Goods) Bill 2017 introduced this morning into Parliament.
The bill is the result of a long campaign by the Australian retail oligopoly frustrated that consumers were avoiding high prices and shoddy services by shopping online on foreign sites. It imposes GST on all purchases offshore, including intangibles such as music, books and software, with the onus on offshore firms to remit GST to the Australian government.
State governments also supported the bill, convinced that they were being dudded of hundreds of millions of dollars in GST revenue — a fantasy retailers were only too happy to encourage.
In a 2012 report for the National Retail Association, “independent consultants” Ernst & Young claimed that $400 million in GST revenue had been lost in 2011 alone, and that nearly $1.5 billion would be lost in 2015; this would rise to a staggering $2.4 billion per year in 2021.
A more sober assessment by the Productivity Commission found that lowering the imported goods GST threshold from $1000 to $20 would reap about $550 million a year — but that would be dwarfed by enforcement costs of $2 billion.
As part of the bill’s tabling, a fiscal impact statement was provided that shows how much the government expects to obtain from the measure. The statement confirms what Treasury had already flagged previously in the 2016 budget — the alleged revenue loss is nowhere near as big as the retail oligopoly and the states made out. How much will the bill reap in extra revenue? Plainly not the cornucopia of $2.4 billion a year — but what about $1.5 billion a year? $550 million a year?
Try $70 million in 2017-18, $100 million the following year, and $130 million the year after that, for a grand total of $300 million over three years. And the Commonwealth won’t see a cent of it — it will all go to the states.
That Ernst & Young report also warned that:
“… with the rapid growth of online retail and the bulk of this growth expected to accrue to overseas retailers, around 118,700 traditional retail jobs in Australia could be lost to the online sector by 2015. This equates to a loss of one in 11 jobs in the traditional retail sector.”
According to ABS industry employment data, between when the report was written in 2012 and the end of 2015, employment in the retail sector grew by 85,000 in trend terms.
Still, at least Gerry Harvey and his mates will be happy.