NSW Wants To Increase Online Shopping Taxes

That's right. The biggest state in the country is pressuring the Federal Government to raise the import tax on online shopping imports. saying that the industry "isn't on a level playing field".

NSW Treasurer Mike Baird is the man behind the calls for higher GST on imported goods, and he proposes that the government get it done by lowering the GST-free threshold on imported goods down from $1000 to roughly $30 according to the Sydney Morning Herald.

That means that — if it gets up — anything imported into Australia worth $30 or more will attract the 10 per cent GST charge.

It's worth noting that the plan was actually recommended by the Productivity Commission in its report into online shopping trends, but the committee actually said that it would be incredibly expensive to police and manage. The commission found that it would cost more to police than it would garner in revenue for the country. [SMH]


Comments

    I live in Victoria.. just saying, if you need anything..

      It would affect all of Aus not just NSW. It's just the NSW Government trying to pressure the Federal into doing it, not NSW trying to introducing it themselves.

      Unless I'm understanding it wrong, then I'll definitely keep you in mind... Lol.

        Only the Fed govt can raise taxes, according to the Constitution. There are exeptions but this isn't one of them, I don't think.
        Also, on the inverse, does this mean anything sold for under $30 in NSW should be GST free?

          Yeah I doubt this would be an exception.
          And yes, but not just NSW. If this were to come into effect, it would be for all states.

            (I think so anyway, I don't know, it's Friday my brain's switched off. Lol.)

    I do not understand how this would work. If you were on holidays how can they prove you purchased something overseas to 'import' it? Does opening it before arrival make it not importing? What if you purchased a Laptop in the US - pay Sales Tax .. when you bring it back into Australia they charge you 10% GST?

    $30 would be too hard to police. And at what price comparison? Given the "Australia Tax" we pay on inflated prices - If I were to purchase a $25 Levi from USA, that sell for $150 here will the Gov't charge me GST of the $150 .. or will they investigate my purchase for a fraud receipt underpricing the value for local Tax avoidance.

    This just opens the door for fraud, and confusion.

      If you were importing Levi jeans and then onselling them, AND you earn or intend to earn more than $50,000 a year, then you would need an ABN. And that means quartly Buisness Actrivity Statements.
      Annoying? Yes! But necessary too.

    I think it's a ridiculous idea to charge 10% GST on anything over $30.

    How is it going to be managed? How is that going to "level the playing field"? If something in the UK costs $50 (AUD equivalent), the same thing here costs $150. Add on the 10% GST and it comes to $55. that's still $95 cheaper than buying it locally. I don't understand how that levels the playing field.

    Just another stupid tax that we have to pay. How about stop making everything so expensive so people can afford crap here instead! Maybe they should look at why things are so expensive here and try to fix that instead of trying to stop people from cheap things overseas.

      It's nonsense that lib governments typically come up with in collusion with fat kulaks like Gerry Harvey.

    Mike Baird can farken beat it! If retailers didn't already mark up their products by so much (even Australian online stores), maybe I wouldn't buy online so much.

    Halfwits like Mike Baird and Gerry Harvey need to analyse these online retailers and look into what makes them so successful. They need to think outside the box and develop a strategy and framework that'll entice consumers to shop Australian, instead of just slapping a fat tax on anything they're not making enough money on.

      Nailed it

      >> If I were to purchase a $25 Levi from USA, that sell for $150 here will the Gov’t charge me GST of the $150
      http://www.customs.gov.au/site/page5549.asp#Calculating - should be the currency conversion on the $30

      Keep in mind you're paying an import Duty, a GST, and if it's over $1,000, a Customs and Border Protection import processing charge. Part of the problem will be the increased need to sign customers assessments for every time you want something >AUD$30 in the country.
      It's not just about making it financially nonviable for you bring something into the country, it's partly about making it impractical.

      If everyone who wants to order a Tshirt from the US has to go in and fill a customs self-assessment, and potentially have to pay duty, GST, and processing fees - as well as taking their time to go to a Customs office - I can see this backfiring pretty quickly

      Exactly. We see so many people jumping to these strange conclusions of "They're successful, lets make it harder for them to be successful" rather than "They're successful, what makes them successful, and how can I use that myself?"

    Paying 10% GST in everything from overseas would make importing 45% cheaper than buying locally instead of 50%.

    Local retailers aren't playing on an even playing field because local rent and power make operating costs huge, as well as high wages that need to be paid. In my industry, which is tech, local prices on brands are set by the local head office, even if it's an international company. Most still use an ancient exchange rate to convert and always complain about shipping (which I don't accept since buying online from overseas also attracts shipping fees) as an excuse why wholesale rates in Australia are about 1.5 times that if the EU and double of that in the USA.

    This comment has been deemed inappropriate and has been deleted.

      Population. DUH!

      and Gross State Product

    I work for a company that grey imports electronics, and at the end of the day, this would only hurt the consumer. People like Gerry Harvey should stop complaining so much, and start pricing their products competitively. Harvey Norman is such a stingy company, that they refuse to discount DEMO stock.

      They also surcharge up to ~$150 more on Windows 7 than other local competitors...

      Most products are priced competitively, you just have to ask for a better price and allow the dunces who pay full retail to subsidise you. It's much easier than scouring the internet to find the best price, then waiting 7-10 days for it to get here, all the while hoping you never have a problem with the goods. e.g. I bought a pair of AudioEngine A2's locally, for about 20% above the US price. Luckily for me because they recently started to distort badly (something has blown in the amp, I think) and all I have to do is pay return postage to Melbourne and they will be replaced under warranty. If I'd bought them from the US, I'd have had to throw them out and buy a new pair.

        " you just have to ask" really? ... why should I go in a shop and ask about better this and better that.... and depending on a mood of sales person I might get 5% or 15% .... right.... price everything accordingly and life will be easy

        The ability to "Ask for a better price" only applies to certain products (mainly furniture and electronics). As a Lego fan I can't walk into a toy store and ask for a better price. They'll just tell me leave.

        You can't walk into Target/Kmart/Big W and ask for better prices. You can price match other stores but nobody will price match international online prices.

    Overseas shopping sites already overcome this by writing the value of the product aon the package s much less than price payed.

    I've got a way to get more revenue for goverrment too. Abolish the states.

      I'd rather abolish local government and/or federal government. I feel much more a New South Welshman than an Australian, that's for sure.

    i was at the pub talking about this last night. wages are EXTREMELY to high. now everyone just " expect' to get a job in the mines and er 120k a year? really?

    i'm 22 and i KNOW I'm going to be living at home for a few more years to come ( I'm a student)

    for this tax. i think they need to have it one way or the other. have the " Austrailain tax" then no gst. i also don't see the point of lowering it to 30$ 30$ is WAY to low to even bother importing anything.

      Excuse me? What??
      Wages are too high??
      There isn't ENOUGH profit being shared around... Wages and Salaries need to go UP!

        The average wage is already over $70,000, compared to $26,000 in the US. So you can bleat all you like about having to pay 50% more for some things but the simple fact is that even if you were paying double, it is still far more affordable for most of us than it is for most Americans.

          $70,000? Are you sure you are talking about Australia?
          http://www.abs.gov.au/ausstats/abs@.nsf/mf/6302.0

            Jake, the heading says that is the average weekly earnings
            So if we take the private & public sector full time ordinary figures, seasonally adjusted we get 52 * $1,351.20 = $70,262.40

            Unless I've interpreted that incorrectly, that means the average wage is around the 70k mark that MotorMouth mentioned.

              Jack* Sorry about getting your name wrong there.

          The average cost of housing in Australia is $500,000 compared to $170,000 in the US. Pointless comparisons are pointless!

        Cost of wages goes up = cost of employing store staff goes up = cost of products and services goes up.

        Want to know why goods and services are more expensive in Australia? It's a no brainer really..

    What a horrendous tax grab attempt by the NSW government. Anyone who has shopped online knows 10% extra in the majority of cases will do little to discourage people buying online from overseas. This is Lip service at best from the government to appease the struggling and vocal local retail sector whilst potentially cashing in on the rest of us trying to save our hard earned dollars.

    They need to charge >100% GST to make "a level playing field"

      Don't.

      Just don't even give them the idea....or else.... You know they will do it the evil b*******

    The reactions in here are predictable, but can anyone explain as a matter of logic why goods purchased from an overseas merchant should be GST free, but goods from an Australian one should attract GST?

    As a matter of pragmatism the threshold has been set at $1000, but as a matter of logic there is no reason for it.

      It's a value-added tax, not a sales tax. The tax hasn't been applied and reclaimed at any point in the process of bringing it to the consumer, which is how GST works.

        It is a "Goods and Services Tax". i.e. a tax on goods and services. A "Value Added Tax" would be called VAT, wouldn't it? If you purchase goods, you should pay the GST. It is quite simple, really. Buying overseas is simply exploiting a loophole.

          The ATO have an explanation at http://www.ato.gov.au/businesses/content.aspx?doc=/content/25193.htm&page=64&H64 , but basically, a Sales tax is charged at the point of final sale (i.e. to the consumer), while the GST is charged at every point along the chain (from the farmer who buys the seeds to you who buys the oranges), and at each stage the good changes hands but the last (i.e. to the cosumer), the business applies to be re-imbursed the GST they paid.

          Overseas business can't claim to be reimbursed for the GST cost, it is simply added to the cost of their good. It means they essentially market their good at up to 10% more than the equivalent local, because they can't claim back input costs, i.e. it is a competitive disadvantage to them. Local retailers get the GST paid back, so they actually retail at less than 10% GST markup (or at least, they should).

    NSW (and other states) will need the extra GST to pay for Federal ALP's outrageous spending.
    I for one am happy to pay GST on ALL online purchases. It makes SENSE to do so.

      If they need money, they should be taxing things it's cost effective to tax.
      If enforcing an import duty and GST on everything brought into the country worth less than AUD$1,000 COSTS the country more money than it rakes in, it doesn't make sense to do so.

    my recent camera purchase - local = $6,600.. online (grey) = $5,000.. so to level the playing field you'll be needing @ least a 25% GST.

    "...it would cost more to police than it would garner in revenue for the country".

    So the NSW Government is asking the federal government to decrease competitiveness via increased cost to the taxpayer (including NSW taxpayers) who will have to pick up the tab for, so it can get more GST revenue, which the taxpayer also has to pay.

    Nice job, majority of NSW voters. You've replaced an incompetent mob with a jerkass one, and got the government you deserve. Enjoy.

    Good luck to them imposing this on digital downloads.

    Good luck with it in general.
    I dont see this working.

      Actually it would be very easy for them to impose it on places like iTunes, because Apple operates in this country and could be taken to court here. The government would probably also get support from IP owners in doing so, as their physical products are generally exposed to GST.

        ITunes purchases already include GST

        The prices for movies and music downloads in iTunes is not set by Apple. So yeah, good luck in getting the music and movie industry agreeing to this.

    I think a contraction of the retail sector is going to happen with this proposed change or without it. As other people pointed out, the addition of GST to overseas online purchases isn't going to suddenly make people buy in retail stores.

    What is the retail sector going to do if this change is introduced and it doesn't make a difference? Overseas retailers are a small part of the problem. An Online+Warehouse+Distribution Australian business is always going to be able to offer better prices than a store in a retail environment.

    I say let market forces decide the size of the retail sector, not legislation.

      I know, Gerry must want another excuse so he can jack up his already high prices. I can totally see him in his mansion saying "nur hur, you puny humans can't import stuff now...so you have to buy from me"

      Every part of our economy is controlled by legislation. There is no better example of how bad things can be for consumers than the deregulation of the banking industry. Far from fuelling competition, all it did was fuel the big banks' greed and make things much worse for consumers.
      A strong economy needs a strong retail sector, allowing it to wither and die because of factors completely out of it's control - wages, property prices, transport costs - would be completely irresponsible for government at any level.

        I hate to admit it, but I agree with you here.
        To let our retail sector wither and die would be a terrible thing for our local economy.

          I don't think the retail sector can die. People are never going to buy 100% of their products online. I just personally think that a contraction of the retail sector is the next stage of selling products to consumers. I'm sure the saddle industry contracted when cars were invented.

          Take the example of a small independent retailer selling widgets in a Westfield centre that employees 3 casual staff. If that business moved online and replaced those 3 sales jobs with a manager, a customer support representative, and a logistics/warehouse person then they would have much lower overheads but minimal impact on the economy. It would also create additional work for IT Contractors.

          That is what I see the future being. I think the economy will adapt, and the only real victim is going to be the large centre landlords. I will however admit that I am not an economist.

    More businesses trying to preserve their dinosaur business models. Or is retail just too lazy to take it up with the supplier?

    So they are investigating why pay to much for goods in Australia and NSW propose slaping a cash grab on over seas goods to make up for it. Retail won't see a cent. Most of the stuff I buy over seas I can't even get here, where is the justice in that.

    Instead of trying to bring online sales to RETAIL level... Why don't the retailers come down and start being competitive!
    What ever happened to free market?
    fks sake.

      You cannot possibly be serious? If every other country is doing it, how stupid are we not to? e.g. Cars made in Thailand land here without any import duty, thanks to the FTA we have with them, but the Territory SUVs that Ford have just started exporting to Thailand attract a 60% import duty despite the FTA. It is a ludicrous situation and the Thai government must think we are complete idiots to allow it to stand.

      Similarly, US-based on-line stores have access to a market that is roughly 13 times the size of Australia's, which allows them to leverage suppliers in a way no Australian retailer could hope to. They also have costs that can be as little as 20% of the cost of doing exactly the same thing here, which they get to spread across 12 times as many sales. They must be laughing all the way to the bank that they can make even more money out of a bunch of self-centred morons who think the world owes them a living. That our retailers are as competitive as they are speaks volumes for how good they are at what they do.

    It's taxation and too much government that is stopping the economy.

      /sarcasm

    its stupid it wont solve the problem, its still going to be cheaper to import.
    if they want more money theyd be better of increasing the gst above 10%, theyd get more money back on that than the hand full of people smart enough to import.

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