Think before you tax online, govt

Think before you tax online, govt

Summary: If the government gives in to a campaign by retailers to lower the threshold for GST without carefully considering the results of an inquiry by the Productivity Commission into the matter, I'd be very unimpressed.


If the government gives in to a campaign by retailers to lower the threshold for GST without carefully considering the results of an inquiry by the Productivity Commission into the matter, I'd be very unimpressed.

Let's leave aside Electronic Frontiers Australia chairman Colin Jacob's argument that increases in online sales likely have much more to do with the high Australian dollar than they do with the GST, and the fact that imposing a lower GST threshold for international sites would be an administrative nightmare. Instead, let's move to the broader issue.

The world is increasingly becoming a place where boundaries across states and nations matter less and less. This is causing many issues, but is also bringing benefits for citizens and businesses.

Not only is information becoming terribly hard to contain, as the release of US diplomatic cables by Wikileaks has shown, but products and people are becoming difficult to cordon into countries.

This means that we not only have access to products we might not have been able to buy before, but we also have access to prices we have previously not experienced.

Of course, we'd want to take advantage of that. After all, isn't that why manufacturers set up their factories in low-wage countries? So they could take advantage of lower prices? So why should they be upset when consumers try to do exactly the same thing?

And yet, many industries are still trying to keep walls up between countries in order to keep old, lucrative models running.

Take the publishing industry, for example. Australia recently took the step into the realm of ebooks, and yet the variety of books available in Australia is much smaller than that in the US because of rights issues. Many people get around this anyway by just putting a US address on their Amazon account. Others download pirated copies of books instead of buying them. Surely this can't be a preferred option for the retailers. Yet, we continue to move along with the time-old rights charade.

Then there's the software market. Why exactly is it that buying software from an Australian site often costs more than buying it from a US one? (Adobe has spoken out on that before on more than one occasion, but I haven't been pleased with the answers.)

I understand that online shopping, and globalisation, scares traditional stores and old mentalities, because it challenges their very existence. Change is in general a dangerous force. Think, for example, about what happened during the industrial revolution. It was misery for many. However, could you imagine a world where governments had moved to ban the use of the factories that caused the fears and job losses then?

The online shift is a gradual process. The vast majority of sales are still made in the traditional manner. For instance, I would never consider buying clothes online, or at least not until clothing brands stop playing silly buggers with the sizes. Glasses are another thing I would never buy online. Also, anything that surpasses a certain monetary limit I won't touch, as I like the comfort of having a physical presence to go to if something goes wrong.

Now many people don't have these inhibitions, and I think they will wear down for me over time. But it will be a gradual process in which retailers will be able to adjust their strategies.

Of course, the National Broadband Network will probably change the rate of adoption of online sales, and perhaps it is this, more than anything else, that has the retailers chary.

But this is business — it involves risk. When government removes that risk and starts pandering to a group of powerful lobbyists, it's killing competition, which is bringing down the costs of goods that we all love and keeping the Australian ideal of fair go alive.

Naturally, some might say that under the Australian ideal of a fair go, we should want our own online sites to have the same tax-free threshold as overseas sites. So perhaps the answer would be to cancel the GST for Aussie sites too, but I don't think it would change people's rush to buy from overseas. Prices are often different by much more than just 10 per cent. As Choice so bitingly said: no one is forcing the large retailers to choose the prices they do. Such an exemption might, however, make things easier for some smaller retailers who are truly playing the competition game.

And it is this consideration that I'd like to see illuminated in the Productivity Commission's inquiry. But until we see the results of that, the government just needs to sit tight and stay strong, no matter what the big retailers, or Greens Leader Bob Brown say.

Topics: Government, Browser, Government AU, Enterprise 2.0

Suzanne Tindal

About Suzanne Tindal

Suzanne Tindal cut her teeth at 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 the site.

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  • "If the government gives in to a campaign by retailers to lower the threshold for GST without carefully considering the results of an inquiry by the Productivity Commission into the matter, I'd be very unimpressed."

    Personally I think it would be a very very brave Govt or a very very stupid one.. As much as people like to rag on the govt of the day. I don’t think they would be daft enough to do it, even if the Productivity Commission was in favour for it.

    As seen of the various news sites around the public outrage would be intense and with a current polling on a knifes edge with no real favourite, the Govt just will not do it.

    The Labor party should and will just say no. The Liberal will be the same.

    I think Gerry's plan has grossly backfired, I think he was looking for the sympathic ear of the public. Actually, upon reflection, I have no idea in what his thought process was when coming out with this.
  • Its fine for the retailers to say I should not buy from overseas at the best price possible but you don't see them buying locally instead of from overseas when they want cheap pricing and thus destroying the local manufacturing industries!
  • Most online sellers charge freight. If the freight is about $10 then the item would have to more than $100 before the GST saving exceeds the freight. So what are the companies complaining about other than loss of profit due to inefficient management. Shareholder profits over consumer satisfaction. I say the retail sector needs a good shake up, so bring it on.
  • It isn't just GST they were complaining about it was also import duties (though I'm unsure what percentage that makes up). Really it should be the government worried about the lack of GST, as every sale that happens from an overseas retailer is 10% less tax revenue. It might not be much now but a few more years down the line and something has to give or taxes have to rise somewhere else. Still I don't know how workable it would be to tax overseas purchases.
  • The big retailers have made a lot of noise about "taxes and import duties", but there are very few import duties of any significance on most categories.

    So it's basically just the GST in most cases, and even with that added to personal imports they would still be far cheaper than anything from the local chains.

    But their campaign has had one big effect. Far more people are now aware that it is much cheaper to buy online!
  • If Gerry Harvey's stores can sell me a set of speakers for $1049 when the ticket price was $1649 and still make a profit he is overcharging originally hoping a sucker will come in and pay the ticket price. Same with lots of other retailers.
    I always haggle on anything I think I will get a better price.
    Now they are finding that online sellers are giving them a hammering.
    Well they must still be making money or they wouldnt do it.
    Doesnt need to be overseas sellers either I bought a Meile Vac on line inc postage for over $100 less than HN's best price.
    Time to get with it or perish I think
  • Its not only overseas sellers I recently bought a Miele vac online from an Aussie online seller for over $100 less than HN's best price.
    Also Gerry Harvey moans about online being cheaper. Well Gerry I bought a set of speakers recently from one of your stores. First one I went into they were $1649 haggled down to $1249, they didnt have the Amp I wanted so went to one closer to home. Got speakers down to $1049 and $300 off Amp. You were still making a profit at that or wouldnt have sold them.
    You rely on the unknowing or timid coming in and paying the ticket price to offset people like me. When I furnished my last house we went to our local HN They would only give 10% on the B/rm suite so we went to another one Got 15% and they got $7000 more business because of that.
    Relying on suckers has gone by the board Why not sell the American way. Take a little and often. Far better to get 20% 10 times than 50% twice.

    A warning for overseas buyers though Check the warranty for as in Cameras they are only warrantied in the country of origin and the local distributor wont want to know you.
    Same with watches in some brands.
  • Taxes are what give Australian's such a great standard of living compared with much of the rest of the world. When we buy overseas our money supports taxation in those other countries rather than ours. Of course when we buy imported goods from Australian suppliers that does too. There in is our real problem. We have become so uncompetitive that we can't afford to make many things here any more. Project ERNA at would solve both those problems and many more and further increase our standard of living too.