Questions about purchasing bicycles and parts
To add some more fuel for thought:
1. Should GST be added to items that aren't sold/available here at all? On several occasions I've tried to buy (usually an up spec model) locally only to find it's not available and when I've contacted the official distributor they've told me they don't import that model as there's no market. Well if there's no market why am I trying to buy it? I've also been told on one occasion "You'll have to wait until next season, I don't want to import that now". Well I want to buy it now (which I did, for less than half the price from the US), not 6 months from now.
2. Should GST be charged on goods and services that I buy when I'm physically OS? If I buy a couple of pair of Levi jeans while I''m in the US for $30 a pop instead of $130 that's charged back home how are they even going to know that I bought them over there?
3. Should GST be changed on used items? Aside from actual used items, it's pretty easy to send items to a friend and have them forward them on (I do this to get around those few companies where the local distributor has whinged and cried until the manufacturer agrees to force retailers not to ship outside their domestic market). These could easily be classed as used as they're coming from a private individual rather than a business. Who can prove otherwise?
There's lots of holes and what ifs. The system isn't perfect (what government system is) so we just have to deal for. At the end of the day GST isn't going to make any difference to the results. Retailers simply must compete on a global market. They either need to force the local distributor to allow them to compete or perhaps look at bypassing them and importing themselves directly because otherwise, things are just going to continue to get worse for them.
Good on Dobby for putting the opposite point forward. But alas I fundamentally disagree.
While I have some sympathy for some of the GST 'fairness' arguments (the Democrat amendments effectively spoilt the GST) - i do not recoil at all from strident criticism of the antiquated retail practices that still proliferate in Australia. It is clear that for certain goods (including many bikes, parts, clothes etc) a global market exists. If you cant establish a point of difference or add value to a product you must compete with that global market to survive. Australian retailers have been very slow to respond.
Globalisation has exposed a range of poor business practices in Australia, inability of many retailers/distributors to adapt to change and various methods whereby distributors seek to force retailers to sell products at high prices or with exclusivity in a form of brand snobbery/protectionism. How firms like Apple and DVD/Bluray distributors are allowed to have differential web pricing by internet and/or through region coding still defies me but that battle is for another day.
As has been mentioned earlier, Cell, Bikes.com.au, Cycling deal all provide a web presence, increasing ranges of products, competitive prices with those from O/S and have retained a physical property presence. They also do this with GST included on sales. So is GST really the issue - very loud and clear this forum has indicated that it isnt.
The assumption that retailers that people wont be boasting about online savings if the AUD falls is a classic example of the complacency and denial that goes with a retail/distribution sector that doesnt adapt to change. One of the fundamental reasons retailers in Oz have been slow to react to a global market is that the AUD has been at a low rate for a while. But the rise in recent years was telegraphed way in advance by the 'very poor Treasury analysis', the reserve bank etc.
A 90% increase in available products and a 30% drop in prices would stop me from buying overseas.
Recently we needed to buy some software at work. Like most companies I was able to buy direct from the website and download codes and software. I figured with USD parity, there should theoretically be no difference between the AUS and USA prices, how wrong I was. USD price was $699, AUS price was $1100 (both prices excl taxes), for a product that was no different, was going to be downloaded so no distributorship costs, storage or warehousing yada yada yada. So I ended up getting the US address of a staff member's parents (with permission) and listed that, paid in USD on the AUS credit card and saved the business over $400. Very stupid situation IMO, but easy to exploit. I could have just listed any made up address in reality and who would know?
I could agree with you, but then we would both be wrong.
Collecting all of these points I will assume that a solution in the near future (in the eyes of business) is not realistic so the best approach would be to understand what is happening and adapt.
One bike shop owner I spoke to recognised the competition of overseas shops on some of his stock, he reduced that stock and concentrated on items that are harder to get from OS shops.
Last edited by AUbicycles on Mon Apr 04, 2011 7:08 am, edited 1 time in total.
Reason: corrected spelling
A true business person, finding a niche and working it.
I could agree with you, but then we would both be wrong.
I would also like to add another reason why many others may shop online from my own experience. I have a disabled brother and for him to load up the car with a gopher/walking frames then go to a shop or shopping complex along with finding a disabled car park that isn't being used is very hard. Most shops don't cater for the disabled as the shops them self are jammed packed with product and in many cases a complete mess with stock laying all over the place even in the big department stores. So for him buying OS/local online is his best solution to a problem many of the shop owners don't care about or think about and in my opinion why should they give a hoot it's there shop and they can run and stock it how they please plus my brother has the same attitude. With disability products here in this country they see you coming and the prices are just hiked up so even the disabled are looking for a fair deal on what they need to purchase. This then extends to every other purchase if they can make savings on disability products then there must be savings to be had with all goods so him being disabled also seeks out bang for buck deals all from his home in the comfort and surroundings that doesn't make life any harder than it is for him.
I could have sworn there has been people living here for quite some time And yes, they were all over the place.
But glad you could wade in and teach us all an economic lesson or two, thanks.
My answer to the Ops question, no.
I still shop locally for some things, if they are within a bull's roar on price. I got a Garmin 500 from my LBS yesterday because it was only about 10% dearer than online. When something is 50%+ or for products I cant get locally then yep, I will still shop online. My LBS know this and are fine with it, which is the reason they are my new LBS
The attitude of....This is what I stock and you need to settle for something from my limited range. And that wanting something outside my range is disloyal. That has to change.
"When people can't use essential services because there isnt enough GST revenue to pay for them, people will realise that levying the GST is fair, equitable and necessary"
Did Gina Rinehart take up cycling and discover wiggle? Quick, someone tell Wayne!
Where you don't understand this - is that enforcing the tax laws of the country is not protectionism - it is enforcing the laws of the country. Protectionism is about large tariffs or equivalent quotas to ensure that local business remains viable (and in many cases pay exorbitant wages to unskilled staff - but that is a story for another day) - I am not proposing GST be levied for local business to remain viable - the tax must be levied because it is on "consumption". Like it or not, the tax was an end user based tax - so the tax must be levied on the end user - if the end user is exempt by buying over the internet - the tax is then a tax on business (which is the very argument these businesses are using).
Where people buy from I honestly don't care - I have bought over the internet myself from Wiggle for apparel, because it offers a large variety and items my LBS won't stock (I understand these arguments) - but I do believe the Government should do the right thing by the system, and that means levying a customs assessment charge, and a GST and tariffs where appropriate (which have been reduced, but not removed totally). The Australian importers and wholesalers are doing nothing immoral or wrong in having a business here, they are just trying to create wealth and employment are subject to these charges - so I cannot see why the public is exempt - because to be quite honest, the public are the first people to have their hands "out" for free hospital and health care, essential services - so in a user pay capitalist system (and one so many are happy to take the "gains" from) - do the right thing and contribute your share, and pay your GST on "consumption".
Happy to pay my fair share as long as the corporates are too. Then again, I believe Operation Wickenby is a far more effective way in ensuring retrievable of tax revenues because it shows the ATO in this country aren't afraid to go after big fish (unlike other countries).
As for 'handouts', that is such a one-eyed view of some of your fellow citizens that I don't believe in continue to debate with you over this point (just let me know how many offshore trusts you have and the profit margins you think are entitled to).
Happy to pay my taxes because in this country I can see it goes to hospitals and schools and those who need welfare. I've lived in societies where people try and avoid paying their taxes and the government and its institutions are pretty dysfunctional there, and the gulf between rich and poor can only be described as a pre-French revolutionary state.
Amateur oenologist and green-friendly commuter.
They all want to be millionaires yesterday, nobody beleives in saving a few years nowa days.
They need to look at their profit margins as well as their importers etc, lobby the government to reduce import duties and other taxes so they can compete.
Why should the consumer keep propping up the rich picks.
I wouldn't mind some of these "free handouts" wherever they are.
Just let me check my payslip it should be written there somewhere.
The free handouts to which I refer are simply the Department of Social Security system (and all of the myriad of Family Tax Benefits - "middle class welfare"), Medicare system and state health hospital system (which is directly funded by GST and other revenues).
I have no offshore trusts.
The profit margin I am entitled to is none of your business, and is what the market will bear. This is not a socialist country and we do not dictate to people what they can or cannot make (and you, would well know, profit margin is nothing unless you actually sell enough to meet fixed costs and is an economic function of sales, quantity of sales, gross margin and costs). While others can dictate many of my costs, with wages (through Union awards) - I, as a businessperson am carrying all of the risk of failure, as well as the rewards of success.
I will say to you, as I say to many, if you think running a business is simple, mortgage your house, run the risk of financial failure and have a go - it is not as simple as everyone thinks it is as an outsider.
There's a good deal of us that don't get or use any of those. I sure don't get any family tax benefits, in fact it pisses me off every time the governemnt wants to give families more while singles like myself get SFA. I have top private health insurance so I don't use Medicare or public hospitals yet my tax dollars goes towards all of this. In fact I can''t think of a single thing that I've ever received directly from the government. I don't have kids so get no benefits from public schools or the myriad of other benefits given to those who elect to have kids. I've never been on the dole or even received Austudy. I've worked for everything I have all the way paying tax (hell, I even get to pay tax on the interest I earn on what I don't spend and manage to save) so others get a helping hand while at the same time being told more and more what I can't do by the government while they waste a good part of the tax collected so if I get to save a few hundred a year on GST and a couple grand more on the products themselves that I buy OS then yeah, I think I'm entitled to it.
The country would be better off actually collecting the income tax from companies such as ikea, google and the like who avoid it by intercompany services, than chasing me for 10% of what I buy off shore.
The trouble with jogging is that the ice falls out of your glass
LOL. You totally underestimate what the ATO actually spends the majority of its resources actually doing.
I fully support the arguments that Dobby has put forward, because they are undeniable. No one likes paying tax, but if you are going to charge it, then charge it on everyone for everything because anything else distorts the market and in this case, actually hurts Australians because there are less jobs and businesses to employ them. If its cost prohibitive to collect, then exempt local purchases. I think that's bloody stupid as a proposal but that's exactly what you are trying to advocate by defending the overseas purchases.
For the record, I wouldn't buy at Cell or Torpedo7 - they are just WAY too expensive compared to CRC or Wiggle. I will consider buying from Australia if they drop their price by 30-40%... I'm trying to negotiate a package deal at the moment. I can't afford to waste money to support Australian anything - I will work around the rules that are in place, because the law is the law, but I couldn't defend the dodging in good conscience.
Any time the Government gets involved with taxes, they stuff things up. The hope is that the taxes will pay for something useful.
Thanks for sharing your thoughts dobby. I appreciate the courage it takes to argue against the tide of popular opinion.
I have a question: If the Govt. claim is true and it's going to cost more to collect the GST on imported goods under $1000 than they actually collect, isn't your proposal to apply the law equally just going to cost the Aussie Tax payers money? Isn't chasing those sub-$100 GST payments going to leave us with fewer essential services?
Of course, the assumption is that the Govt. is correct when they say it will cost too much to collect them. Surely, in today's age of electronic banking for online purchases, they would be able to slip in 10% fees automatically ....
My proposal that GST be collected is fair, just and possible. It is financially viable.
Strange how the Government (and society supports them in this) can enforce laws on business to work as unpaid tax collectors for GST, PAYG and the like - but won't incur the expense themselves. Many businesses spent thousands, tens of thousands, and probably millions in the case of large multi national companies to implent GST collection systems - and it appears the Government wont do similar - that is really, really pathetic.
The Government argument that it will cost more to collect GST and Duty than they will recoup is not a valid argument. Levy a fee for collecting the Customs charges (importers like myself pay a $200 customs charge for duty assessment on containers, levy a $45 processing fee, the GST and Duty at an 8% uplift factor on the total cost of the consignment, that is the items and freight - which is what people who import have to pay if doing it commercially). It will not be "perfect" but these fees are why many Australian items are more expensive than their imported counterparts - because of extra charges importing businesses have to pay - make it fair and let everyone pay.
If this system is not addressed the GST must be changes in one of 2 ways - exempt retail purchases less than $1000 in value for goods that can be legally imported, keep the 10% GST on food, and increase the GST on other goods greater than $1000 in value to make up for the GST "lost" in exempting the items under $1000. That is fair, that is just, and a level playing field for everyone.
For the poster who receives "nothing" for his taxes paid, look again and open your eyes and stop being so narrowminded and selfish, you live in a country where you drive on roads (funded by the tax system), your country has a defence service (funded by tax system), in a natural disaster there are emergency response services (funded by the tax system), you probably don't have polio or measles or mumps outbreaks (immunisation funded by the tax system), you are able to go to a hospital and your doctor visits are funded by Medicare. Your type of attitude really shows how selfish people are - you "get" lots of things from the tax system, it just didnt suit your narrowminded argument to acknowledge those. It was your choice not to have children, but here is the thing, some of us want the country to continue, and people do have children - who else will pay tax to keep you in your old age, when you need aged care?
I thank those for commending me for having a differing opinion, this is why we actually have people study Economics at Uni. So that there are people who can look on a very broad set of circumstances (that many Econometrics people can't do). I will leave you with one of my favourite quotes "If mankind minus one were of one opinion, then mankind is no more justified in silencing the one than the one - if he had the power - would be justified in silencing mankind" JS Mill (On Liberty).
So while customs are storing all these items waiting for for recipients to pay up, who's paying for the storage of all the said items?
So I decide I'm not paying or I say not me, I didn't order it. Who's paying to have the article returned to the sender?
Its not just about collection of tax on smaller items, its about efficiency. Each time a dutiable item arrives at customs, it is stored, the recipient is sent a notice requiring them to complete paperwork (online I think now), pay a fee, respond to the notice, hope the recipient completed everything correctly, fix it if they didn't (because unlike regular importers they are unfamiliar with the paperwork) and then if you're lucky the item is collected by the delivery company and sent on.
Far more efficient to let smaller items through. Otherwise every item from OS will need a declaration including letters and cards as there could be a CD/DVD/BluRay disk containg dutiable software items in the birthday card envelope. Where do we draw the line, oh that's right at $1,000.
I could agree with you, but then we would both be wrong.
You are correct - I just wish they were more successful.
The ATO uses classic bully tactics - mostly everyday folk have no choice but to comply (or they feel the full force of the ATO and their righteousness) whereas money and power are treated a whole lot differently and settlements are often negotiated.
And don't get me started on tax exempt organisations such as religions - particularly Sanitarium
The trouble with jogging is that the ice falls out of your glass
I got nothing as a single either, and I get nothing as a family either. According to the ATO, my non-working wife is not a dependant, and neither is my 2 year old son. We get no benefits, did not get any "baby bonus", don't get any Family Tax Benefits. I still have to pay Medicare + Private Health to avoid getting slugged extra. To add insult to injury, the govt recently changed the Medicare Safety Net to specifically exclude certain obstetric items, so now I am up for thousands of dollars for our second child because we chose not to burden the public system (our nearest hospital is Private only). I actually did the sums, and purely from a tax perspective, we'd be better off as a family if my wife and I separated! That sounds insane, I know, but that is how it is.
I don't mind not getting benefits. What irks me is people who get all of the handouts and then still whinge that they pay too much tax!
'11 Lynskey Cooper CX, '00 Hillbrick Steel Racing (Total Rebuild '10), '09 Electra Townie Original 21D
What I said was "In fact I can''t think of a single thing that I've ever received directly from the government." See that word directly, as in hand outs, benefits, bonuses etc? Yeah there's roads which I get to pay more for through taxes and then in order to be allowed to use them I have to pay for a a license and then if I want my own car I also get to pay rego (not to mention the tax on purchasing the car itself) then to run it I get to pay excise on the fuel and GST on the excise. Sure we have a defense force and emergency services and a huge array of other governemnt services. Not sure about that immunisation thing. I don't recall ever having any immunisation but maybe I was too young. I've certainly had measels and mumps and plenty of other things though so maybe if I've been immunised I should get a refund? I can go to hospital or to see a doctor but as I said I have private health insurance so I don't use Medicare (not that I've used that either except for a bit back on dental and optical). Yeah you're right again that I chose not to have children but why do those that do choose to have children when they can't support them then expect a handout from the governemnt? Would I get a handout if I went out and did something I couldn't afford? As for old age, I doubt I'll get anything there either. The pension probably won't exist by the time I retire and even if it does, going off how it is today you basically have to have nothing in order to get the pension. Own a house = pension reduced. Have some money in the bank = pension reduced. Have some shares or other assets = pension reduced so I'm pretty sure I'll be paying my own way all the way to the grave (which I'm sure I'll be taxed on). AS I said though, at no point do I receive anything directly from the government. Am I being selfish? Yep I am because I'm the only one looking out for me so I have to be. With that established I'll try and bring it back on topic.
The fact remains that the government says they don't want to collect GST on private imports below $1000. Is it fair to retailers? Probably not but arguing for the introduction of it isn't exactly endearing retailers to consumer is it. All the consumer sees is the retailer trying to cut some of what the consumer is saving and in the end the private import is still going to be cheaper so it looks fairly petty action by the retailer. So while I can see and even agree on some level that the playing field should be level, I can also see that the real effect the whole argument is having is turning those that already import further against those retailer tryign to spoil their party and keeping the issue in the media just continues to bring it to the attention of those that don't import but then see hundreds of people say "yeah I buy on the net and save up to 70%" etc and then think to themselves "maybe I'm missing out and should be buying online as well."
I don't agree that it's economical to collect all GST however. eg one of my recent purchases were some LED globes off ebay for a whopping $4 shipped. Do you really think the administration costs of recovering $0.40 wouldn't be more than the collected $0.40? Now my latest purchase was $255 shipped so $25.50 GST may be worth it (BTW cheapest local price for same item was $408 and they didn't have stock anyway) but if the government says no, that's fine with me but either way, the sale was always going OS.
All I ask is that you read what I wrote earlier, this issue is not unique to Australia, it is happening globally.
If you send something to the UK, VAT is collected on items over 38GBP (about $55 to $60 Australian Dollars), similar to Canada and a little higher to NZ (but not a lot). The decision has been made there that it is worthwhile to levy VAT or GST - so as Australians we get no advantage from exports to those countries - but our buyers do gain from imports and tax exemptions - so business loses twice - it is a really really bad policy implication - similar to a reverse Marshall Larner principle. Australian business loses on exports to those countries due to their restrictions - and loses from imports here.
If someone imports commercially it is ok to levy them witha Customs fee, Duty and GSt at a figure 8% higher than purchase price (freight and insurance is added to the purchase price at the exchange rate at the date of purchase - which sucks if you hedge currencies or buy your currency forward in a strip hedge for a series of imports - but that is a story for another day) - same must apply to buyers importing privately, charge them a fee for Customs Clearance, and Duty and GST at the FOB cost.
The storage fee is called "demurrage" and every importer pays it if their paperwork isn't in order - so why should the consumer be exempted too?
while I agree with most of what you've said, this is incorrect, the family home is not included in either the Assets or Income Test for Centrelink benefit calculations.
I could agree with you, but then we would both be wrong.
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