Last week’s federal budget left many retailers disappointed but digging further, the government has decided to increase the Import Processing Charge (IPC).

The government intends to restructure the IPC to recover costs of import related cargo and trade functions. The IPC for electronic sea import declarations will be increased by $102.60 to $152.60 per consignment and the IPC for electronic air import declarations will be increased by $81.90 to $122.10. These increases are set to become effective on 1 January 2014.

According to executive director of the Australian Sporting Goods Association (ASGA) Shannon Walker, this move will only give consumers more reasons to shop online and overseas, further burdening local retailers.

“The cost of these increased charges will have to be passed on from the importer, to the retailer and then to the consumer, giving them a disincentive to shop in store. Meanwhile, the government has still not reduced the low value threshold which, as we have been pointing out for the last several years, is a further incentive to shop at online overseas stores,” he said.

Similarly, Australian Retailers Association executive director Russell Zimmerman said the increase in the IPC is just another blow to retailers’ confidence after the government refuses to reduce the low value import threshold (LVIT).

“Given the Government has ignored calls to reduce the LVIT on GST, matters have only been made worse for retailers who have now been hit with yet another charge,” he said.

According to the Australian Traders Group (ATG), if a reduction to $20 in the threshold from the current $1000 collection rate begins as soon as the election is over, anywhere from $500,000 to $1 billion GST could be collected in the 2014-15 financial year, rapidly growing to well over $1 billion in the following few years.

“The ARA believes that the continued delays in reducing the threshold are impacting jobs as well as state government revenue,” Zimmerman said.