Below is a short article I wrote about the upcoming low value import tax in Australia. It is similar to the Netflix tax which calls for GST on digital services. It may sound a bit dry and in many ways it is but how the tax is handled could fundamentally change how Australian’s buy goods and services through online marketplaces such as Ebay and Amazon. When I originally wrote the article it was unclear as whether the bill would be passed. A senate hearing had recommended a delay. With only two weeks until the imposition date it is still unclear though both Ebay and Netflix are making preparations. Ebay had threatened to reduce activity in Australia if the bill was passed.
Netflix has announced a price rise to pass the cost of the tax onto consumers. Ebay has sent two emails to account users advising them that as of July 1 GST will be charged on any sales by all users on Australia ebay unless the seller has an ABN. GST does not apply to businesses that have a turnover of less than $75,000 per year. Therefore the average ebay seller could apply for an ABN and not have GST imposed on goods that they sell. A minor inconvenience but worthwhile if you just happen to sell some second hand goods here and there on the platform.
The bill had also called for resellers such as Ebay to collect GST on goods sold to Australians from overseas sellers. Ebay argued it is a reseller and not responsible for collecting taxes within its platform. Foreign Ebay websites do not yet appear to carry any information for international users selling to Australia.
In researching the issue I found the retail sectors were often basing their arguments on incorrect, exagerated or biased figures in arguing for the tax. On the other hand those against the tax such as EBay and the Australian Taxpayers alliance had vested self-interested and/or unclear motives.
The same arguments about protectionism of industry have risen before in respect to the CD industry and book publishing and each time it felt to me that the calls for protectionism were designed to protect retail sectors unwilling to adapt of change their business models. This is reflected to in that Angus Robertson are one of the very few Australian book chains to utilise Ebay as a point of sale. Meanwhile the vast majority of the Australian retail industry rely on poorly built web portals and for whatever reason chose not to also utilise marketplaces such as Ebay.
A tax may help Australia’s retail sector. Some sort of incentive to maximise web presence would probably be more useful.
Here is the original article with information correct on 12 May 2017:
A senate hearing report has recommended a delay on imposing GST on low value imports into Australia. The GST Low Value Goods bill calls for GST to be charged on all imports under $1000. The bill is currently set to be enacted on 1 July 2017 and focus primary on consumer goods purchased on online marketplaces such as EBay and Amazon.
The bill was introduced by former treasurer Joe Hockey in 2015. It has since been championed by the current Federal treasurer Scott Morrison.
Currently only imports of over $1000 in value are charged GST. These imports are assessed and charged by border forces.
The Senate Hearing Report found that projected revenue from GST on low value imports is expected to amount to $300 million over three years. According to the hearing this revenue would not meet the costs associated with border inspection of low value imports.
Other countries impose a similar GST on low value imports. Both Canada and B
ritain charge GST and import duties.
Part of the criticism of the current bill is that it calls for online marketplaces to collect the GST on imports. EBay had stated that this may not be feasible and could lead restrictions on some sales to Australia.
Australian retail sectors have argued that the bill is necessary
and will help level the playing field and make Australian business more competitive against online marketplaces.
Leesa Lambert is a member of the board of the Australian Booksellers Association (ABA) and owner of The Little Book Room in Carlton North.
“It’s necessary to help the local industry compete. Without GST on imports overseas marketplaces can offer a ten per cent discount relative to our price points. It’s an unfair advantage.”
Tom Bradford, it eh co-owner of Lulu’s record store and Cool Death Records.
“We don’t expect much to change. The bill could make us marginally more competitive against buying online but we’d still be more expensive. We’ve alway
s sought to make out point of difference our physical presence rather than price point.”
The Australian Taxpayers Alliance condemned the bill in an advertisement in The Australian as bad for Australian businesses and shoppers.
Representatives of the ATA and others undersigned did not reply for request to comment. The GST Low Value Import bill is expected to be enacted in its current form on 1 July 2017.