By Aimee Chanthadavong

The decision to close the GST loophole on imported goods valued at less than $1000 has not been made; instead has been delayed until March next year.

This comes after Federal Treasurer Joe Hockey met with state treasurers on Wednesday to discuss lowering the GST threshold for online purchases.

NSW Treasurer Mike Baird said while no there was no decision; progress was made with all the state treasurers uniting in the push for a lowered GST threshold.

“The fact is the tax treatment of goods bought online from overseas is a relic from the days when few people shopped online,” he said.

“Now it is growing by between 10 per cent and 15 per cent each year and we think it’s time that we bring our tax system into the modern age.”

Baird said the latest ABS estimate is that there is between $650 million and $702 million annually the states are not receiving indicating a “leakage in the system” needs to be rectified in the interest of “struggling retailers”.

“That is almost $3 billion over four years – enough to build 300 schools across Australia. At the same time, this is about bringing Australia into line with other countries around the world,” he said.

“There is still considerable work to do in terms of how this can be administered in the most efficient and cost-effective way, but we are encouraged that the Commonwealth has today committed to a decision in March.”

Some retailers have called on the GST threshold to be lowered down as far as $20, which would mean based on research by Ernst and Young $1 billion GST could be collected in the 2014-15 financial year.

National Retail Association CEO Trevor Evans said the threshold was enacted before online shopping became a widespread phenomenon, but it had grown to become a major factor compromising the integrity of the GST system.

“The plain fact is that GST was always supposed to apply to the types of consumer products that people are now regularly purchasing online,” he said.

Similarly, Australian Retailers Association executive director Russell Zimmerman said: “Australian retailers have been competing at a disadvantage for too long, and it is only fair that the closing of the GST loophole is made a priority.”

However, Paul Greenberg, CEO of National Online Retailers Association (NORA) believes the key to being competitive is innovation and not taxation.
“NORA urges established Australian retailers not to use the lower value threshold review as a "smokescreen" for not delivering on a vastly improved retail experience for Australian shoppers,” he said.

“NORA understands the arguments in favour of taxation equity between countries, but also urges government, state and federal, to include peak consumer groups in the process of review.

“We encourage government to consider the all aspects of the review including ensuring the cost of collecting GST on imports does not exceed the revenue. We also note that inbound parcel lanes from global retailers should not be slowed as part of the process of review.”