4 Out Of 5 Say ‘No’ To Online GST
A study, conducted by MasterCard, found 79% of online shoppers oppose increasing the GST threshold for overseas online retailers.
The GST reform, advocated by retail groups locally, would mean consumers buying goods from non-Aussie retailers would pay more GST on goods priced under $1000.
Currently, GST on goods worth less than $1000 are exempt from tax, but new reforms could push this threshold as low as $30, meaning the price of goods could increase by as much as 10%.
A massive 12.6 million adults have shopped online in the last year, the research also shows.
However, 60% of those surveyed by Mastercard said the GST hike would not stop them from shopping overseas online, which could be bad news for retailers locally, who blame the GST loophole on recent sluggish sales, and say the loophole makes the price of local goods appear uncompetitive.
Aussie retailers pay 10% GST on all goods sold.
Back in late 2010, an army of retailers including Harvey Norman, Best Group and Myer, kicked off their protest calling for changing the GST rules for foreign operators, but have been less vociferous since, fearing a backlash from price conscious consumers.
The GST review final report, released last month, says the low-value import threshold should at least be halved from $1000 to $500 – a move that could be done almost immediately.
However, the government has indicated they do not intend to lower the tax-free threshold in the short term.
The findings show price isn’t the only factor driving people to shop with foreign retailers online, said MasterCard Australia’s vice president strategy and corporate affairs, David Masters.
“Online shopping has become the norm. For many, the comparative benefits are too good to pass up.”
The challenge for Australian retailers is to deliver where overseas retailers cannot on service, delivering a personal approach, says Masters and “there are so many local retailers who get that absolutely right,” he said.
|86 per cent of those surveyed said price was important, but Australians are “hard wired” to want to shop locally, says Masters.
However, Australian Retail Association boss Russell Zimmerman hit back at the Mastercard findings saying: “while we don’t expect overseas buying behaviour to change, Australian retailers have a right to be able to compete equally in the online space.”
The chief executive of local online retailer Dealsdirect.com.au, Michael McRitchie, says reducing GST exemption levels won’t stem the tide.
“The current online market dynamic is here to stay; the onus is on local bricks and mortar and online operators to lift their game in areas where the can make a difference.”
“After sales service, delivery times, product knowledge and being a ‘trusted Australian name’ count for everything in the online world.”