Hockey wants state govts to lead online tax push

Hockey wants state govts to lead online tax push

Summary: Australia's treasurer Joe Hockey has called on state governments in the country to finalise a proposal to lower the threshold for online goods below AU$1,000 by the end of 2014.

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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. 

Topics: Government, E-Commerce, Government AU

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Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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6 comments
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  • FFS

    So they want us to have crappy internet (FTTN), censorship internet, and then lower our tax free threshold for online purchases.

    FFS.
    DanielZenno
    • Not sure this will get up

      Hockey seems to be saying he'll do it, but only if states wear the costs too e.g. states would have to receive 'lower' GST revenue. I'm not sure they'll accept that proposal.

      But they do look like a bunch of luddites!!!
      NZO893
  • Who is footing the bill?

    If there is no business case for it, then why bring it in? Apart from keeping Gerry happy that is, and I don't actually consider that a "business case"...
    Tinman_au
  • Rule number one of Politics

    Rule number one of politics, always structure unpopular things so you can blame someone else.
    Cowcakes
  • ANd how will this be implemented?

    The reason it's $1000 now, is the cost to implement any solution would cost much more than the revenue it would attract. And don't bother asking international online stores to collect it - why would they? Yes some would, but our government would never get it!
    And why only online sales? What about incoming travelers?
    tonye56
    • This is largely correct. The full cost of assessing and imposing GST on each small parcel would amount to about $70, on top of the GST amount. This is why it is completely uneconomic to reduce the threshold much below the current realistic figure of $1,000.
      It also explains the enthusiasm of Gerry, Bernie etc to bung it on - at those levels, the impost would be more like an import tariff than a simple tax extension.
      anonymousI