Would a 10% GST surcharge stop you from buying overseas?

[dobby]

http://www.theaustralian.com.au/nationa ... 6032273275

CYBER-SHOPPERS are costing the federal government $1.3 million a day by buying tax-free imports over the internet, the Treasury has revealed.

Lost revenue from the GST -- and the savings to consumers -- are forecast to grow 10 per cent each year to hit $610m by 2013-14.

The Productivity Commission has found Australia's $1000 tax-free threshhold for imported products to be the world's most generous outside Hong Kong, where all imports are tax-free.

In a report that will fuel pressure from traditional Australian retailers to restrict tax-free imports, the commission says it would be "preferable" to give all retailers the same tax treatment.

"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 says in an issues paper published this week for its inquiry into the retail industry.

"Consistent with the principle of minimising distortions in resource use, it would be preferable to apply the same rates of taxes to all imports so that competing businesses were treated equally."

Retailers are lobbying the Gillard government to overturn the Howard government's decision in 2005 to raise the tax-free threshold for imported goods from $250 to $1000, on the grounds it cost Customs too much to police.

Overseas goods bought over the internet -- including fashion, perfumes and cosmetics -- are exempt from the 10 per cent GST as well as Customs duty of 10 per cent for clothing and 5 per cent for footwear. But Australian "bricks-and-mortar" retailers, which import goods in bulk to sell within Australia, have to pay both taxes, which they pass on to shoppers.

The Treasury has calculated the exemption will save shoppers $460m in GST payments this year -- enough forgone revenue to pay for the government's promise to fix hospital waiting lists.

The tax break is forecast to widen to $500m next financial year, $550m in 2012-13 and $610m in 2013-14, according to Treasury costings.

The commission paper reveals that Australia's tax-free threshold is 50 times higher than Canada's, three times higher than in New Zealand or Singapore, and eight times higher than Japan's.

It says the commission "understands" that the average value of parcels entering Australia is less than $100 -- 10 times below the tax-free limit.

"Based on the preliminary evidence available to date, it appears that even a large reduction in the threshold may not necessarily have a significant impact on the number of parcels not subject to GST and duty," it says.

The commission refers to claims by some retailers that smaller retailers are "abusing" the tax-free threshold by buying goods valued at less than $1000 from overseas, and onselling them to customers without paying GST or Customs duties.

"There is nothing illegal about this practice, but some have alleged that the current regulations in this regard put larger local retailers at a competitive disadvantage," the report says.

The report says some consumers buy over the internet because they "simply cannot purchase an equivalent product from a local supplier".

[apsilon]

http://www.theaustralian.com.au/nationa ... 6032273275

Interesting. So that means we spend $14,300,000 every day on private imports. That $5,219,500,000 per year. I believe the latest figure is that about 38% of us shop online so if we all did it that figure would be around $13,735,526,315 per year. Still seems pretty small compared to local retail sales of $250,000,000,000 per year.

Wish we had greater statistical break down. eg how much of that daily $14,300,000 are sales under $100, under $250, under $500 etc.

[dobby]

I'm sorry but if your sums are correct 5 billion worth of retail sales is a little "large" to be considered "private imports" anymore.

there is no way of ever gauging the correct amount of private imports because who says the Customs Declarations are correct on the incoming articles?

Retail figures include food and fuel - remove those and you will see 5 billion is quite a percentage of discretionary retail.

[Xplora]

If you don't like the laws, get your MP to change them. If they won't, run for office yourself. There are options, but crying on the internet that you deserve to avoid GST because you shouldn't have to pay tax on an imported good that your neighbour would have to pay tax on if he buys it down the street is incredibly shortsighted, and quite childish.

The only people "crying on the internet" have been the big boys in town, the top end retailers who are secretly bunking for an exclusion from GST for their goods under $1000.

Me, I'm happy for the rules to remain the same, but if the government did decide that Customs needed to chase GST on every little $10 imported product I guess I'd pay it..... and still be ahead for most of the sorts of overseas purchases I've been making. When products are a) not available in Australia, b) sold at a 60% - 100% price premium; a 10% GST makes little difference to my purchase decisions.

This isn't true. There are dissenting voices against the importation exemption, they just aren't loud. A lot of taxes are inefficient - stamp duty is a classic and without it, our states would stop working. The GST as a tax is efficient, but not efficient to administer. Yes, the GST is COLLECTED as part of the purchase process, but GST also needs to be claimed back as well, and this requires an annual, quarterly or monthly bookkeeping exercise which ends up being quite onerous on a business, particularly a small one. In effect, the ATO is taking money from 3-4 groups of people, and giving various amounts back. The end consumer is only one that truly pays, but a number of businesses have had to spend hours upon hours every year working out what they can claim back, as well as sending a bunch of money on a regular basis.

It's not the big end of town - we all pay for GST collection, and I don't think this is a good enough excuse to not charge it for imports.

Interesting point... I paid the NOOB TAX for locally purchased Shimano shoes. One store didn't stock them anymore, couldn't compete online, I paid DOUBLE what I could have bought them online for. I didn't argue, I won't buy there again - I simply needed to try on the shoes. Funnily enough. they charge 20 bucks to try on shoes if you don't buy (to discourage the internet shoppers). Even at 20 bucks, it would be cheaper to try and then go online.

There has to be a better businessplan LOL

[gururug]

Funnily enough. they charge 20 bucks to try on shoes if you don't buy (to discourage the internet shoppers). Even at 20 bucks, it would be cheaper to try and then go online.

Nasty. I get it that there are a few walkin's that use an LBS for "sizing". Poor form to charge people to try stuff. A bike test ride maybe, but a pair of shoes

[DavidS]

......To those who harp on about labour costs in Australia, just how little do you expect your employees to live on? Could you survive if you were working a 40 hour week and earning say $10 an hour? I doubt it......

Suppose it depends on what the definition of survive is. Is surviving having two cars and driving them to work instead of a suitable alternative? Is it having streaming internet 24/7, game consoles, bling bikes, a boat and other things? There are many things that we do not need to survive. But try telling that to the average Australian bloated on excess consumption and the overinflated opinion of being owed something.

So just what would you consider a reasonable reaonable wage for say a retail worker?

DS

[stryker84]

Haven't read most of the thread, but had an interesting yarn today with a owner/manager of an LBS, about how online shopping's been affecting their business.

Apparently they're being priced out by online stores, due to most of these online shops having head offices in Ireland, where the tax the company pays is almost non-existent. Seems Ireland wanted/needed a quick boost to their economy (and from my meagre understanding, they WERE going down the crapper a recent while back), and provided the tax breaks to attract businesses to set up there. A quick google search seems to corroborate this, though I haven't really gone into it too deeply. NB: this is all hearsay, just an interesting perspective I heard.

Also, while it worked initially to atttract companies, with the huge boom in online business, seems the Irish Govt is now actually losing money from having to provide infrastructure, but because of the tax breaks, they aren't seeing a corresponding benefit anymore to these companies. Which means that in a few years, the situation might be changing again... or so the LBS hopes. I suppose what it means is.... buy NOW, and watch this space!


..... also says that the LBS does know, and indeed they too can purchase theuir stock (in sub $1000 lots) from OS, and save on the tax, but then they lose the orthodox supplier's business, which means they'll be able to provide competitive pricing on the big consumables, but for smaller goods and LBS services and parts (not full components, but workshop parts e.g., jockey wheels, proprietary parts, etc), they won't be able to get supplies, so they're tied to the regular wholesale channels, and associated tax markups, which has to be passed along somewhere. Something to think about, anyway.

[AUbicycles]

stryker, your right - this is one factor that has contributed to the the price differences and speaking to cycling trade I have heard some good stories of how brands loose track of their own product as they pass through dodgy (OS) distributers and over borders. The good brands take action, the bad ones ignore this which gives has a negative rub-off effect on their other international distributers.

An LBS would run into trouble if they didn't get their products through the right channels - one aspect is fulfilling warranty claims which in the case of an product from OS would have the following chain: customer > LBS > overseas shop > distributer > brand

[ausmomo]

Australian shoppers are simply ripped off by either the retail outlets or the suppliers.
Here are some examples I've come across myself over the past 12 months;
a) Nikon D7000. US RRP USD$1200. Aus RRP AUS$2100. That was on release. Prices have come down since.
b) KitchenAid mixer. US best price I found ~USD$290. Here... $650.
c) a book I bought today cost me AUD$56 delivered (from the US). In the shops here... $135.

I'd happily pay 20% GST as I'd STILL make a saving.

I feel ZERO loyalty to the shops here when they charge so much.

As for bikes...
my LBS sells a Knog computer for $110. I can get it from the UK for about $60. Aren't Knog a Melbourne company?!?!

[CyclistInOz]

Coming from the UK where shoppers quite often get the raw end of the deal compared to other countries (US) it surprised me that Australians seem to get ripped off even more.

There seems to be some real price gouging going on. I suspect on the part of both retailers and distributors. A lot of products come from Asia which is right next door to Oz, yet are still cheaper in the UK or USA.

I find shopping online in Australia a frustrating experience. There doesn't seem to be any concept of real time stock levels. The process goes something like this. 1) Find and order product (a frustrating experience in itself on poorly designed website) 2) Get a email sometime (more often than not a few days later) confirming order 3) Get a email back a week or so later saying that there is no stock and it is on order 4) another week or so later get another email saying stock has arrived 5) another week or so later finally get a delivery. I realise that Australia is a logistical nightmare due to its size and population concentrations but if retailers want to stem the flow of customers going overseas then improvements need to be made! Just in time is not an acceptable stock control process for retail.

Compare this with purchasing in England or America via internet from oz 1) Find and order product (sometimes frustrating but generally slick) 2) get instant order confirmation 3) get dispatch confirmation (and sometimes tracking number) 4) receive goodies (normally under a week!)5) Save a stack of money - even taking into account postage!

[Xplora]

Blame the union movement here, because they have been responsible for some incredibly high and unreasonable wages here. Fact is, a coffee is a coffee, and paying a barista twice as much doesn't mean you get better coffee, and has a major impact on the end cost of the product. Retail just looks unreasonable because the product comes from elsewhere, and they do nothing except sell the product.

Would you take a 25-50% pay cut tomorrow? I wouldn't like to, but I bet a lot of Australians could take a major haircut if they controlled their spending (including nondiscretionary purchases like fuel, rent, mortgages and food). SMH had a ridiculous article about a North Sydney couple on 190K a year combined bleating about a cut to govt benefits would mean they'd have to delay a big renovation. My heart bleeds That's the perfect example of what we're talking about - Australians can have a totally unrealistic view of what is really important in life when it comes to money.
It's a simple fact that our country is run as if it was the USA or the EU, but we lack the population to truly be like those economic blocs. We can't afford to live the way we do as a nation, evidenced by the cost of retail. These businesses can't survive without the huge markups. Retail isn't the biggest sector in the country. That should tell us that these prices aren't unreasonable for the lifestyle that our people want to live. The retail bloke isn't a charity, he's a businessman. If he can't compete, he'll leave. It's been happening for decades already, and the prices are still high.

You can't pay the barista twice as much and expect the coffee to cost the same.

[waynohh]

On the weekend I bought a helmet from a LBS. It seemed to fit, the sales person didn't say anything and there's no lights in the change room where the only mirror in the store is. I get home and read the AS/NZS 2063 book that comes with it and find out it really doesn't fit me; it doesn't cover the forehead at all. I go back to the bike shop the next day. NO REFUNDS. I get a different helmet, they won't refund the $40 difference, or even give a store credit. I had to buy 2 of the cheaper helmets and spend an extra $60 to cover the difference. Later after I get home, I notice 1 is bigger than the other and discover the useless LBS has labelled one the wrong size. The manufacturer sticker with the actual size is covered up. I didn't try it on, because it was supposed to be the exact same size of the exact same model.

I don't see how people can wonder why local retail is such a crock of !! BAN ME NOW FOR SWEARING !! with service like that. Every time I step foot in a LBS i get screwed.

[AUbicycles]

waynohh, thanks for that example. We all hope that it is an isolated case though without a doubt, bad shopping experiences don't help the industry as a whole. The good shops realise the value of customer service and profit when their customers are satisfied. In this case. maybe they can't compete on price all the time, though there are some great examples in this forum where bike shops are forward thinking and offer good customer service and (+ expert advice and quality servicing) and give customers pretty good reason to consider purchasing from the LBS.

Sorry it has worked out badly for you - I am afraid I don't know what your rights are and whether helmets may have an exception to the rule and legally and can't be returned - perhaps someone else can help. Store credit sounds like a pretty good compromise to me - I fear that if you can prove you have the right to return the helmet - considering your report, it is not going to be a fun process following it up - if you wern't talking to the owner, ask nicely to speak with the owner.