The federal government’s independent research and advisory body, the Productivity Commission, has released an issues paper to assist those preparing submissions into the public inquiry of the Australian retail industry’s economic structure and performance.

In its paper, the commission, which focuses on topics including the challenges that online and international shopping has had on the local industry, said while there has been increasing pressure to lower the $1000 GST-threshold to level the playing field, a “large reduction in the threshold may not necessarily have a significant impact on the number of parcels not subject to GST and duty”.

According to the commission, this preliminary conclusion was made because data from Australian Customs that a majority of parcels entering Australia is “less than $100”.

Additionally, based on a review conducted by the Board of Taxation in 2009, it was highlighted that if the threshold was lowered, it would mean great compliance costs for both Australian consumers and businesses, as well as administration costs for the government associated with the collection of the additional GST and duties.

It could also potentially increase delays in receiving goods, which would mean the need to pay customs agents’ fees to facilitate correct assessment and payment of the relevant import duties, the commission said.

The paper said the Treasury has estimated the GST-threshold would cost the government $460 million in 2010-11, rising to $610 million by 2013-14.

“The number of parcels entering Australia under the low value importation threshold has risen in recent years and is likely to increase further as online shopping becomes more prevalent,” the commission said.

With the commission’s issues paper now released, retailers and interested groups will have until May 20 to make their initial submissions.