Lowering GST Threshold For Online Shopping Would See Aussies Foot Massive Price Increase

We already know that lowering the threshold on overseas purchases would cost more to implement than it would make in revenue for the government, but that won't stop Australian retail businesses begging the government for it. Consumer action group, CHOICE, has crunched the numbers on the implementation of a GST hike and found that Aussies would foot a 37 per cent increase on their average purchases under $1000 for a tax that costs the government more than it earns.

CHOICE found that over three-quarters of Australian online sales are under the value of $1000, meaning that most of us who import goods from overseas using sites like Amazon would be screwed over by any lowering of the GST threshold.

By lowering the GST threshold, the government would collect tax revenue on purchases below $1000. That's something that a government review has found would actually cost more money than it would earn the government.

In order to make the collection profitable, Australian consumers would likely be slugged a 37 per cent increase in the total cost of ordering products like gadgets from overseas.

Big retail -- the likes of Harvey Norman, for example -- has a dog in this fight, in that by making online purchases more expensive than Australian mark-ups, consumers would actually go through local retailers rather than offshore.

Depending on the government's decision on the GST threshold in the upcoming budget cycle, big business might get its wish.

Mix that with the prediction that gadgets in Australia are only getting more expensive in 2014, and our wallets are in for a bad year.

Instead of lowering the GST threshold, CHOICE suggests that a middle-ground might be charging a flat-rate of $14 for the cost of collecting tax on parcels, similar to the system in place in the UK right now. It's certainly better than the alternative.

Image: Shutterstock

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