Lower GST threshold won't quell foreign online spending: MasterCard

Lower GST threshold won't quell foreign online spending: MasterCard

Summary: Old habits die hard: Australians will not stop buying goods on foreign websites even if the government lowered the GST-free threshold on items purchased overseas, according to a study by MasterCard.

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Despite the vociferous rally from Australian retailers and politicians to lower the GST exemption threshold, such a move will not stop locals from shopping on overseas websites, according to a study commissioned by MasterCard.

The payments technology vendor said that roughly 12.6 million Australian adults have shopped online in the last 12 months.

Last year, a report by the GST Distribution Review panel recommended that the current GST threshold value be slashed in half from AU$1,000 to AU$500, aiming to alleviate the pressure that online shopping has put on traditional bricks-and-mortar retailers.

The recommendation was rejected by the federal government, which cited a Productivity Commission report noting that lowering the threshold would cost the country more money due to a flawed parcel-processing system.

The MasterCard study was conducted by Galaxy Research on 1,250 Australians between the ages of 18 and 64 who have shopped online in the past year.

It showed that 79 percent of Australians are against the changes to the GST threshold, but that it wouldn't deter them from spending money. Around 38 percent of respondents said that the GST threshold change won't alter their online spending habits, while 24 percent said they would shop less online should the changes go through.

Sixty percent of regular online book and DVD shoppers said that they will continue to buy regularly from overseas websites even if the GST threshold is lowered.

"The current online market dynamic is here to stay; the onus is on local bricks-and-mortar and online operators to lift their game in areas where they can make a difference," local online retailer dealsdirect.com.au chief executive Michael McRichie said in a statement. "After sales service, delivery times, product knowledge, and being a 'trusted Australian name' counts for everything in the online world."

Topics: E-Commerce, Government, Australia

Spandas Lui

About Spandas Lui

Spandas forayed into tech journalism in 2009 as a fresh university graduate spurring her passion for all things tech. Based in Australia, Spandas covers enterprise and business IT.

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4 comments
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  • I'd suggest...

    That an increase from 1000 to 1500 AUD would be more reasonable, to allow for inflation over the 12 years since GST, and the value of 1000, was introduced.
    meski.oz
  • of course.

    lowering the threshold wouldn't help in any situation.
    even if people were charged the GST on imported products, more often than not, it'd still come out much cheaper than many of our local ripoff merchants.
    Rei_zero
  • Lower GST threshold will not work

    It will not stop any one from shopping from foreign websites because even after the low thereshold, it is still cheaper than most of the local rip offs. Microsoft Press released book costed $148 at borders but on Amazon it was $58 including postage charges. I could have bought 3 books out of $148 with few more extra $$$ added.

    what matters to people is the value for money, if you can find else where 50% off, why would you go to bricks & mortar and pay double.
    karthik007_v
  • 10% GST would still be cheaper

    The difference in tax is a minor component of the massive price differences and availability of products bought online and locally, so it would have minimal impact on local sales.
    Cowcakes