The US Senate announced their intention to vote on a bill that would give states the authority to collect sales taxes on all internet purchases. The Australian Retailers Association is urging the Australian government to do the same.

The bill, called the Marketplace Fairness Act, would grant all states the power to collect taxes from out-of-state vendors selling goods to their residents, and is expected to be voted on next Monday.

ARA executive director Russell Zimmerman believes it is time for the Australian government to also act on the issue of tax-free online shopping, and says a reduction of the Low Value Imports Threshold (LVIT) would prevent erosion of state GST resources. This lower of the LVIT threshold would also enable the collection of GST on parcels below $1000 as well as from overseas suppliers.

“Reducing the LVIT is a simple and economically beneficial solution which needs to be implemented without delay, and the ARA looks forward to continuing to work alongside the Government to implement a lowering of the threshold which will help Australian retailers remain globally competitive,” he said.

“As the direct line between Government and the retail industry, the ARA is committed to ensuring Australian retailers – whether they operate in store or online – are on a level playing field with their online overseas counterparts marketing products to Australian consumers

“State governments are also missing out on revenue due to the tax collection loophole created by not lowering the threshold, and this is obviously a significant missed opportunity for state treasuries.

“If Australia was to follow the US Senate and introduce a Marketplace Fairness Act or similar, not only would Australian retailers enjoy an equal trading environment but states would also uncover significant revenue – said to be around $272 million potential revenue in 2014 alone.”