Think before you tax online, govt

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.
Written by Suzanne Tindal, Contributor

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.

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