Why lowering the gst import threshold will not work
The latest and greatest idea to slow the growth of consumers buying online is to lower or eliminate the gst threshhold for imports. The argument for this is that by forcing people to pay gst on their overseas imports, fewer people will buy online and instead head back to the shopping malls. The reality of this is that since a large percentage of international orders are lower value, having to pay gst on those items will not significantly change consumer’s behavoiur – especially with the Australian dollar so high in value. Because shipping prices in Australia are very high compared to overseas, local retailers will still be competing with foreign sellers who can ship items to Australian consumers cheaper than an Australian seller.
What about the cost of collection? The paperwork required to complete customs forms can be long and involved, and if this process isn’t going to be streamlined (involving the cost of review, changing and communication of the change), then there will be significant costs in collecting the tax when items arrive. It will also push up shipping times for Australian sellers importing goods from all of the extra paperwork being performed by customs agents.
The solution to the issue is not applying a tax on consumer buyers importing goods into Australia, it’s helping Australian businesses be more competitive on their shipping costs within Australia. It should not be the case that it’s cheaper for a foreign seller to send an item to an Australian consumer from a foreign country cheaper and faster than a domestic seller can send it to that same Australian from here. Does Australia Post needs a review?
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