Uproar at retailers' online GST campaign

Summary:Brick-and-mortar retailers have already experienced considerable resistance against their campaign to have GST imposed on purchases under $1000 from overseas sites, with consumer groups and politicians weighing in against a change to the GST threshold.

Brick-and-mortar retailers have already experienced considerable resistance against their campaign to have GST imposed on purchases under $1000 from overseas sites, with consumer groups and politicians weighing in against a change to the GST threshold.

The campaign, backed by Myer, David Jones, Harvey Norman, Target, House, Borders, Angus & Robertson among others, began with full-page advertisements in some of the nation's newspapers.

The retailers are concerned that the exemption for foreign sites will disadvantage them and cause thousands of job losses.

Harvey Norman chairman Gerry Harvey said that exemption gives overseas retailers "a free kick".

"Why can't I have the same deal as overseas retailers?" he told ABC Radio.

"I employ people in this country, I do pay taxes, I pay rent, so can I have the same go?"

Harvey said overseas retailers regarded the GST exemption as "manna from heaven".

"You've got stores all over the world thinking 'what a beauty that Australia is'," he said.

"This is a shocker."

Electronic Frontiers Australia chairman Colin Jacobs said he thought the number of jobs said to be endangered by the disparity was likely overblown given that the vast majority of purchases were still done with traditional businesses.

He also thought it far more likely that the high dollar was causing a flight to online, rather than any difference in GST.

Jacobs said he believed that the truth would come out in an inquiry by the Productivity Commission looking into the matter.

The current system was very beneficial for consumers, Jacobs said, adding that any change to impose a lower threshold for GST would "vastly complicate transactions".

He also believed that such a move would be going against the goals of the government's flagship project, the National Broadband Network.

"Part of the vision for the National Broadband Network is that more and more commerce will move online," he said. Any moves that would create a disincentive to move online would hinder that vision, he believed.

"With the NBN on the way, any changes targeted specifically at hindering online shopping should only occur after a lot more study and consultation."

Harvey Norman and Myer previously threatened to open online stores in China to combat the problem.

Online retailer Ruslan Kogan called their bluff and said that if those retailers did so, he would link to their sites on his own site.

Jacobs said the fact that they have not as yet taken that option raised a question about whether the playing field is really as uneven as they claim.

The Electronic Frontiers Australia chairman pointed out that bricks-and-mortar retailers saw online retailers as competition and that anything they say should be seen through that prism.

Consumer advocacy group Choice described the retailers' campaign as an "alarmist red herring" driven by self interest.

"The big chains should recognise that it's their high prices, limited range and poor customer service that increasingly encourages people to use the internet," spokesperson Christopher Zinn said in a statement.

"Consumers are simply chasing the best deal and the best service and often these days that is found online."

Choice used the example of a digital camera (Canon IXUS 1000 HS) available online from Myer for $557.

The same camera could be purchased though an Australian online retailer for $433.50.

Purchasing the camera from Hong Kong through a company with Australia-based sales staff would cost $346.

"Major stores are not being forced by anyone to charge these high prices," Zinn said.

"This debate is about quality of service, competitive pricing and the inability of some retailers to understand the future of internet shopping."

Independent Senator Nick Xenophon said the campaign doesn't acknowledge that small businesses are those most hurt by internet shopping.

"It's extraordinary to hear Myer, David Jones, Harvey Norman and Target all claiming they want a level playing field when ... the extraordinary market power of these very businesses has put enormous pressure on the small business sector," he said in a statement.

"It's like watching Goliath pretend he's David."

Xenophon said the big retailers with their buying power and considerable resources had significant advantage over smaller retailers.

"I would argue if anyone was going to get an exemption from GST on goods under $1000 ... it should only be the small business sector."

Assistant Treasurer Bill Shorten maintained that imposing the GST on every item purchased from overseas is too expensive.

"The cost of compliance would be greater than the tax raised," he said, adding consumers and retailers wanted a considered response from the government, not a knee-jerk reaction.

Shorten said there was no denying Australian retailers were doing it tough in recent times.

"But the GFC [global financial crisis], the high dollar, poor sales before Christmas, I don't think justifies flattening a tax willy-nilly where it hasn't existed before."

Harvey was unimpressed by the argument, accusing Shorten of being out of touch.

Carousel image credit: Australia Dollars image by InfoMofo, CC2.0

Topics: Hardware, Government, Government : AU, Laptops, Mobility, Tech Industry

About

Suzanne Tindal cut her teeth at ZDNet.com.au as the site's telecommunications reporter, a role that saw her break some of the biggest stories associated with the National Broadband Network process. She then turned her attention to all matters in government and corporate ICT circles. Now she's taking on the whole gamut as news editor for t... Full Bio

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