Changes to GST could lead to pointless parcel pick-up tax as US heads in opposite direction

Consumer advocacy group CHOICE has warned the country’s treasurers, who meet tomorrow to discuss lowering the Goods and Services Tax low-value threshold (LVT), that such a move could lead to consumers paying a new ‘parcel pick-up tax’ when buying from small online retailers.

“If treasurers decide to lower or abolish the LVT, international experience shows Australian consumers could face new fees for ordering from small overseas businesses that aren’t registered to process the GST,” says CHOICE Director of Campaigns & Communications, Matt Levey. 
“No other country has been able to compel international companies to pay a sales tax without implementing a parcel pick up tax that punishes consumers. Whatever decision the treasurers make today, they need to demonstrate how this will work and that it won’t hurt consumers.”
“If any change mirrors overseas measures, consumers would have to go to their local parcel pick-up, pay the GST and also pay a ‘parcel pick-up’ tax before they can get what they ordered.”
“Under the same approach as the UK system, a $20 book purchased online from an unregistered business could end up costing an extra $2 in GST, plus $16.97 for the parcel pick-up tax.
“It would also throw online retail into chaos, as uncollected parcels ordered from unregistered businesses are left to clog up post offices across the country.
“Paying almost $17 in fees to collect $2 in tax would be crazy economic policy. It’s got nothing to do with raising revenue or removing a 10% price difference – it’s about punishing consumers to protect local retailers from global competition,” Mr Levey says.
CHOICE also says suggestions that lowering the GST threshold will even the playing field and keep Australia in step with the rest of the world are plainly wrong.
“The United States is currently considering legal measures to raise their threshold from US$200 to US$800. This equates to a AU$1090 low value threshold, bringing it into line with Australia,” says Mr Levey.
“We implore the State and Territory treasurers – don’t cut Australians off from competitive online markets. The last thing Australia needs is a poorly designed new tax that won’t raise net funds, but will hit households.”

“CHOICE supports a level playing field for local and overseas retailers, and if we can reduce the current LVT while raising net revenue –factoring in the costs to consumers – then we should do so.”
“But there’s a reason the threshold has remained in place, and that’s because the economics don’t stack up. If treasurers have found a way to fix this problem, consumers will be keen to see the details,” Mr Levey says.