The Queensland Treasurer Tim Nicholls has called for new Australian Prime Minister Tony Abbott to consider lowering the Goods and Services Tax (GST) threshold for online purchases to well below the current AU$1,000 rate.
The states have been pushing for the threshold to be lowered since at least 2010, with major retailers such as Harvey Norman particularly concerned that the lack of GST on overseas online purchases below AU$1,000 has been damaging their bricks-and-mortar retail businesses.
The former Labor government conducted a GST review in 2012, with the report recommending in December that the GST threshold for online purchases be brought down from AU$1,000 to AU$500.
But the difficulty with reducing the threshold is that with a reported 58 million parcels entering Australia under the AU$1,000 threshold in 2011, the cost of setting up a system to process so many more parcels would negate the potential gains that the government could extract from the added GST, according to former Assistant Treasurer David Bradbury.
Nevertheless, the former Labor government had been looking at a way to lower the threshold by the end of this year, but with a change of government, the potential change could now be sidelined. While some states, such as Western Australia — which just had its AAA credit rating stripped — have called for the GST to be increased from 10 percent to 12.5 percent, Nicholls remains set on adding GST to overseas online purchases.
"Let's address that low-value threshold which actually disadvantages some of our traders and business people here in Australia. Let's do that first because we think that's an achievable outcome. As far as the rate is concerned, at this stage, we're not advocating for that, and that would be something that would need to be led at the federal level," he told the ABC.
Abbott's office has already indicated that there will be no change in the base or rate of the GST. In the course of the election campaign, Abbott was forced to rule out any changes to the GST several times after Labor launched several ads suggesting that the then-opposition leader would make chances to the tax when in office.