Hockey wants state govts to lead online tax push

Federal Treasurer Joe Hockey has indicated he is seeking for the states to finalise a proposal to tax goods worth less than AU$1,000 purchased through overseas online retail outlets by the end of this year.

Prior to the federal election last year, Treasurer Joe Hockey promised that there would be "no change to the GST [goods and services tax]. End of story". This promise included taxing goods purchased through online overseas retailers.

Currently goods purchased for less than AU$1,000 through the online retailers are not subject to the GST.

But the treasurer looks to be breaking that promise, indicating on Friday that he was waiting for state governments to agree on a proposal to lower the threshold from AU$1,000 to a lower, as-yet-undisclosed amount.

"It needs to be unanimous agreement amongst the states," he said. "I want it to be bipartisan if it is going to happen. The states have expressed an interest in doing further work in this area. I want to bring it to a head this year."

Hockey said he would seek the support of both sides of politics, and said that the propsoal already had the support of the Labor-aligned head of the Shop, Distributive and Allied Employees Association, Joe de Bruyn. Hockey said the decision on whether to move ahead with the proposal would be up to the states.

"The State Treasuries are coming to Canberra to look at the business case, to fully analyse the proposal and then to make a final decision and this is up to the states," he said.

The business case for lowering the threshold remains to be seen; the cost of checking every parcel entering into Australia could potentially outweigh any extra GST incoming through online sales. The former Labor government reported that based on 2011 import levels of 58 million parcels entering Australia under AU$1,000, the cost of setting up a system to process those parcels would negate the potential gains the government could extract from the extra GST revenue.

The Liberal-National Queensland and New South Wales governments have indicated support for lowering the threshold for GST on goods purchased online, but the West Australian reported today that the WA government would be unlikely to support lowering the threshold while the distribution of GST to the state is lower than the government desires.