Union lends weight to online GST fight

A retail union has put its weight behind retailers' pleas to the government to do something about a GST exemption for online purchases of under $1000 from overseas sites.

The Shop, Distributive and Allied Employees' Association has over 230,000 members, leading it to call itself the largest trade union in Australia.

A group of retailers started a campaign against the GST exemption, saying that it is disadvantaging Australian businesses. It called for the government to level the playing field, but the government has said that any action will need to await an inquiry being held by the Productivity Commission.

Previously, the union had said that the retailers' campaign was overplaying the threat that online shopping posed to their businesses.

However, the union has now spoken in favour of abolishing the GST exemption. The union said, in a submission to the inquiry, that there were a number of factors that led to a downturn in retail fortunes of late, including the continuing effects of the global financial crisis, rising costs, low consumer confidence and an increase "albeit modest" in sales for overseas sites.

The union said that it is difficult to quantify the trend towards buying goods from overseas sites — and said that it is therefore difficult to judge what effect it has had on the industry. However, it believed that the GST exemption for overseas goods under $1000 encouraged the trend, and said that the government should impose GST on all overseas purchases.

"We acknowledge that this would not necessarily remove all adverse factors for Australian retailers seeking to compete in the global market, but it would significantly even up the playing field," the union said.

Assistant Treasurer Bill Shorten has previously said that imposing the GST on every item purchased from overseas would be too expensive.

"The cost of compliance would be greater than the tax raised," he said earlier this year.

The union admitted that such action would increase administrative costs for the government, but didn't believe that this changed anything.

"That is not a reason to do nothing," the union said. "The government does have a responsibility to ensure that Australian retailers are not forced to compete on an unfair or uneven basis with overseas sellers."

It wasn't about what revenues would be added to the government's coffers, according to the union, but about "equity and fairness".

A submission to the inquiry from the National Retail Association earlier this year said that it had been conducting a survey with small- and medium-sized retailers from which it had, at the time, received 156 responses, 96 per cent of which believed that the $1000 threshold had negatively impacted turnover. Twelve per cent of retailers surveyed believed that they had lost in excess of 50 per cent of total retail turnover.

It extrapolated from the survey that the threshold had already cost 2000 jobs in some sectors of retail.

The Commission is seeking initial submissions by 20 May for its draft report.