Independent consumer group Choice has revealed how Australians who shop online at international websites could pay an additional 60% on their purchases after proposed GST changes.
Why is this change being considered?
The argument to lower the GST threshold on imported goods from $1000 to $20 is being led by powerful Australian retailers who have seen their market share decline while the online boom has taken off in the past few years. They argue that by not imposing the GST on online purchases under $1000, foreign retailers have an advantage they cannot match.
Critics see this as a thoughtless reaction, hitting consumers with added costs and delays while ignoring the real reasons Australians shop online. Some of the online social buzz around this topic suggests many consumers just don’t feel Australian retailers are keeping up online, at any price.
A recent Choice.com.au study of online shoppers found that only 12% of shoppers said saving on duties and tax was their main reason for shopping online, while 68% say that shopping online saves them more than the 10% GST, compared with a local retailer.
Proposed changes affecting online shoppers
Currently the government is considering two options:
1. Government will absorb the extra costs of collection
Lowering the online shopping threshold to $20 would raise more than $550 million in extra revenue per year however the cost in administering such a change would be up to $1.5 Billion per year – 1.5 Billion taxpayer dollars. It seems unlikely the Government will choose this option and take the cost from the Federal Budget.
2. Pass the extra costs onto the consumers:
Under this option, consumers would see a collection fee charged to the consumer when they pick up their parcel. This fee would include the 10% GST, plus a charge levied by the collection company to check the parcel. Choice estimates that the cost of $20 parcel could rise to $35 and consumers would see added delays having to collect and pay this fee on their online shopping parcels.
What looks most alarming to some; under this proposal consumers would pay up to $13 extra on a $20 purchase, just so the government could collect $2 more in tax revenue.
Details of the final changes won’t be announced until March 2014. Hopefully the final plan won’t cost taxpayers more in admin costs than it earns in tax dollars.
What do you think about these proposed changes? Will they stop you from shopping online? When you’re looking at an overseas purchase, would added GST and shipping tip the scales in favour of Aussie retailers? Share your thoughts with us over on Facebook.