Can Anyone Defend Imposing The GST On Overseas Online Sales?

It's a line of argument that Gerry Harvey completely denuded of credibility: allegedly the main reason shoppers buy online is that the lack of GST on online purchases under $1000 makes them cheaper than local competitors. It takes about five seconds of work to demonstrate that that position is total rubbish, since the savings from overseas shopping on many products are way higher than the 10 per cent GST rate. So will anyone stand up to support it?

Picture by Chris Hyde/Getty Images

One woman who will is Margy Osmond, CEO of the Australia National Retailers Association (ANRA). To be clear, that's her job; the official ANRA position is that any purchase over $100 should attract GST. But at a lunch hosted by marketing company Salmat, Osmond was staunchly ready to defend that approach when I asked her about it. Her stance: "We think the threshold should be lowered for any number of reasons."

That said, she doesn't pretend that GST is the whole story. "GST alone is part of the puzzle." Other issues the ANRA is concerned about are the cost of salaries in Australia, bans on parallel imports and the relative inefficiency of the local supply chain. Collectively, those might account for the apparent price differences, but it's far less evident how the issue might be resolved.

For instance, one ANRA argument is that Australians should be willing to pay GST, since if we don't then there's less money feeding into the taxation system. By ANRA's estimates, overseas sales account for at least $630 million in lost GST each year. Osmond argues that number is on the low side, since it doesn't include fraud in the form of parcels shipped in with a falsely low declared price.

But whatever the numbers, that assumes a level of community interest which, to be frank, Australians appear to shy away from in droves. If we were genuinely concerned about the current welfare of our society, we wouldn't freak out about the carbon tax or about paying more tax to support the education and health systems. Poll data suggests that's far from a universally held view. Indeed, we seem entirely capable of railing against people getting paid lower wages or getting sacked while simultaneously complaining about the price of absolutely everything we buy.

In short, we're contradictory, but we don't want to be told that. We want cheap goods while everyone gets a decent wage. It's not going to happen, but we're not going to stop complaining while it doesn't happen.

Originally published on Lifehacker


Comments

    If retailers such as Apple and Canon priced their products at the same level in Aus as they did in other countries then this would be a non issue. But they don't and it is.

      Apple isn't a good example. A lot of their products are very close to parity in pricing (when US takes are added to the price)

      Apple actually does a very good job at pricing their products in parity with the US. it isn't 1:1, but it's not far off. People always seem to overlook the fact that the US prices exclude any tax's on the items where the AU includes the 10% GST or that those $99 iPhones are only $99 when bought on a two year contract.

      Granted, more expensive application on the app stores etc begin to get skewed at a point (such as Final Cut X), but for the most part they are ok.

      Theres far worse culprits out there, the video game market being one example.

      Why should they? Their costs here are very different so why should customers in China subsidise us?

    Can Margy Osmond explain that even hypothetically allowing for the GST, what I buy overseas is still way lower than buying the same product here, adding postage in as well? Example Merrell Moab boots, I recently bought, AU$99 on ebay, add 10% pretend GST $9.90, freight AU$32.....same boot here AU$245.
    Take a cold shower Margy, my money is too hard come by to waste on feel good.
    I pay enough in other taxes, petrol, power, water, etc, as it is.
    Another point, I go to, say, Big W to buy some clothes, all made in China, I pay GST and a healthy markup on that stuff. If I shop directly in China myself...get the idea? It's called Global Trade, and not only big business can play the game.
    Big W buying there allows for big profits, me buying there lets me keep more of my income, now that IS important to me!

      Interesting that you choose to complain about the price of petrol and electricity, as ours is some of the cheapest in the world. It seems that even when you are getting a good deal, you still bitch and moan like an over-tired 5 year-old.

      The simple fact is that the government needs to get a certain amount of money fro us in order to do all the things we elect them to do. If you think you are ducking out of paying your fair share by shopping overseas, you're kidding yourself. They'll just find other way to get it out of you. I am happy to pay local prices on most things. When I buy Merrells on eBay, which I have done twice in the past, it is because I can get the exact shoe I want, not because I can get them cheaper.

        Interesting that you choose to state facts without research.
        http://en.wikipedia.org/wiki/Electricity_pricing#Price_comparison

        Australia is the 15th most expensive when it comes to electricity, with the UK being 12% cheaper and the US being 55% cheaper.

        Petrol is a slightly different story, with (while we're at $1.50/L) the UK paying $2.37/L.
        The US is on $1.03/L...you could always move to somewhere like Saudi Arabia and pay $0.13 per Litre. ha.

        The GST is a non issue. I'd be happy to pay the GST but it won't stop me buying OS. I save hundreds of dollars buy OS and the GST I could have paid is a fraction of that saving.

      i agree with you slow train if i can purchase clothes for my children straight from china say $12 for a wwe shirt ,when other big retailers are selling the same item for $25 ,what is the average everyday low income family going to do,im not going to give these big companies more profit,dont forget the everyday person buys the item at $12 the companies buy these items in bulk probley lucky to pay $3 a shirt making BIG BIG profits,id rather save some money for me myself and i thankyou

    ANRA can kiss my ass, they are obviously bias so who cares what they think. Not to mention as already pointed out adding the 10% GST to all overseas purchases won't really affect peoples buying habits as it's not enough to come close to aussie prices.
    The real reason they want to impose the 10% GST is to complicate sales and cause many businesses (particularly smaller overseas online only shops) to re-think selling to aussies if it means the added complication of GST for what is a relatively small market.

    If ANRA wants any credibility they (imho) should focus on bringing local pricing down before attacking online shoppers.

      No GST would be collected at the boarder as it is done now for items over $1k. That $1k limit is there because any lower and it's not worth the govts

    I think adding the GST on online goods makes sense in principle, not because it'll make local retailers more competitive. The GST was introduced because it was a more effective means of taxation, replacing the sales tax while also reducing income tax. Unless you disagree with the GST because of its regressive nature, then on principle there's no reason why it shouldn't be added towards online goods (besides the assumed difficulty in implementing it, which is probably why it hasn't been done already).

      The main reason why they won't tax imports under $1000 is because the cost of implementing the measure is greater than the projected revenue.

      I'm always happy to pay more for convenience and good service and many of the online retailers I use are Australian businesses. I use them because it is far more convenient to have things home delivered, and I can more easily compare prices online.

    The wages are high because bills keep going up, like rent, power and gas. Cost of getting to and from work is going up. If you drive, you have fuel to pay and possibly parking. Catch public transport, well that goes up too. Fuel cost can be factored into transporting goods too. Unless the cost of living is gonna come down, then I don't want to take a pay cut. If things are gonna go back to 1980's prices. Sure, I will gladly take a hit in my hip pocket.

    If Australian Retaliers weren't so damned busy gouging 100% + profits from the Australian public, maybe the Australian public would look to local retailers to buy from instead of direct to China.
    I'm just saying is all.

      Its not true.

      I get to see the margins, profit/loss, and other figures of a major major funiture and homewares retailer and the numbers are looking very very very bad. Not good for me personally but hey you roll with the punches. Wholesale cost is not going down. Its going up. Excuse number 1 is that Chinese factory workers are getting paid more due to stiff wage competition for people to work in Civil/Government services in China. Secondly they're all claiming increased material costs. Again this latest round of excuses coincided with the Aussie dollars ascent.

      I'd dare say that two things have fundamentally happen in the retail sector. We went from a country that produced the goods and sold them locally to one that imports nearly everything that is sold at a retail level . Ironically when the two existed and competed the obvious decision was to sell the cheaper imported material then the local produced, much more expensive, item.

      Of course once we had moved our retail sector over to such an arrangement, and we saw a massive 'deinflation' (rampant supply, low prices) we definitely enjoyed ourselves (see the 90s and early 00s).

      Now a new competitor has emerged to imported goods sold via your traditional retailer and that is the online store. We're now facing a new proposition. Do we destroy our local retail sector in order to get the cheapest possible product. I dare say we will and its already happening.

      If you look for retail support positions like buying, planning etc you'll see large percentage of ad's (pretty much all of them) are for E-Businesses, selling online exclusively. There is very little work in the industry for traditional brickfront retailers. They're all going through contractions.

      Next time you go to myers etc have a look at how many staff are in store. They are barren wasteland because the businesses are chopping at their biggest cost outside of trade goods and that is staff.

      That said electronic retailers i.e. Apple who are owned by Apple US have no excuse not to sell products at the same rate. How can business sell to its internal business units at a higher cost then to ones based in the US?

      at least australian retailers are doing the right things and paying taxes what about these sneaky people in australia buying clothes cheaply in china importing items in making sure it stay under $1000 at a time and get a waywith paying no gst and no tax than selling items through facebook making a profit while most of these people are also claming centrelink

    I can defend it simply because it's not a good or service being provided in Australia, it's total BS that the gov takes a slice of money being spent overseas, it's none of their business.

    On the other hand, I see that it causes a slightly competitive advantage to people selling from other countries, but it's still BS...I also don't particularly care if they impose it, I will still buy stuff from overseas.

    Even then, you would hope they damn well didn't end up losing money on implementing it, if they did that, that would piss me off.

    So ignoring the same arguments that get presented EVERY time an article in Internet/overseas pricing arises (eg, camera's are expensive here, look at this precise example I have). The reasoning for applying GST is actually sound.

    GST isn't charged right now to ensure customers pay more, it's a tax. It purpose is to collect revenue for the government to use. Right now the value of directly imported goods into Australia (shipped to consumers) is reasonably low. But if the trend continues it will start reaching a point where GST revenue is impacted. When this starts becoming a problem there'll be little choice but to apply GST to imported goods.

    Basically it's inevitable that we'll be paying GST on these things sooner or later. The question is now, where are these goods going to come from? Will Australian retailers step up and live on, or will they be replaced by overseas retailers, adding a layer of complexity to our customs process?

    To put it another way, can anyone argue that the lack of GST isn't a factor (among several) in the popularity of online shopping? If you can't, can we at least have a sensible discussion about the issue, rather than just repeating the usual cliches, HN jokes etc?

    Oh, and nice pro-carbon tax propaganda line there Angus - concern about the current welfare of our society is the reason many people are "freaking out" about such a pointless tax.

    *"For instance, one ANRA argument is that Australians should be willing to pay GST, since if we don’t then there’s less money feeding into the taxation system."*

    That is a stupid (and faulty) argument. In fact, it isn't an argument, it's merely stating a logical tautology...

    It's basically saying that all Australians should be willing to pay more tax, since if we don't then there's less money feeding into the taxation system.

    I don't think adding GST onto the price of imported goods will make any real difference, especially when the price difference is very big. Basically, if the final price, including exchange rate, shipping & taxes, is still significantly less than buying it locally people will continue to buy overseas.

    We live in a global market, so we should not be restricted in any way from buying anywhere we chose.

    The simple fact is, how is it going to be enforced?
    There's so many ways around this sort of thing it's not funny. And as others have said, what's the difference between me going to China, and BigW bringing stuff in from China? A: Nothing, but BigW get to mark their shizzle up to make a profit AND cover GST.
    The other issue is that there are a LOT of products simply not available for sale in Australia, because we're such a small market. So you have to make that definition of something that's not up for sale here yet, so really by buying it online you're not hurting a local retailer at all, therefore that argument for implementing GST is invalid.
    Retail is a defunct industry in the global era, it doesn't matter which way the dollar goes. If our dollar is high, then technically the retailers should have just as much buying power as Joe Public does, however they get stung with all sorts of taxes and tarriffs which they're moaning about the regular person not having to pay.
    Australia desperately needs the dollar to drop, to get manufacturing and exports back in the global market and start bringing some coin back into the country. End of the day, if you're buying everything from overseas, where is your money going? Overseas.

    And quite simply, fsck the taxation system. Using that argument is so medieval it's not funny.
    Drop the dollar, increase exports, bring more money into the country, increase jobs, people will have more money to spend, they're less inclined to go overseas because it ends up costing more cos of the exchange rate, and hey presto you've got more taxable transactions.
    Won't stop me buying stuff that's not available, but for Joe Public it will.

    As long as business is prepared to also pay 10% on the "S" part of GST for any services they source from overseas then I'm all for it. How many jobs have been lost overseas for backoffice, call center operations, etc.. Business should also be contributing there 10% as well.

    apart from apple, and other US tech companies that own the retail operations (pretty much) that sell local I'd say that if you removed the GST from online sales that suppliers to those retailers would simply find a bullshit excuse to raise prices by yep you guessed it 10%.

    that's exactly what has happened since the Aussie dollar has sustained its high levels over the last 6 months. Suppliers for general goods have found excuses to raise their wholesale prices.

    We should give up the idea of Australian owned retailing in this country and just allow them to be owned by the company that produces the goods. then there won't be any excuse for not having a single global base line cost. with small deviation for local taxes/wage differences.

    I priced a Camera & lens here in Oz $5,500 Is what they wanted I bought it over the net and
    after GST and a custom charge it cost me$ 4,321 the shops here are way to expensive that
    was a $ 1,179 saving And the were more helpful .A lens just a few weeks ago just under $800 cheaper global trade is here to stay I would not have mind paying a couple of hundred bucks
    more but not as in the first case $1,179 Why should we pay for Harveys horses ?

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