The Overseas Purchasing Debate

[boss]

And for good measure

[ThePhil]

Well the hindsight is now, before they let it drag on for another 5 years.

[boss]

Have you ever taken any interest in politics before you got a bee in your bonnet about imports under $1000?

And you haven't articulated if you want more taxes (i.e. tax goods under $1000) or less taxes (no import taxes). Your video seems to indicate you want less taxes, but your posts seem to indicate you want more (i.e. close the loop hole, rather than scrap the import tax).

Either way. I told Darryl Kerrigan about you, he told me to tell you this.

[Xplora]

LOL they DID go to Henry for a tax review phil... and they IGNORED it. Unless it fed directly into the ALP political agenda... carbon tax, mining tax etc.

Not sure how old you are phil, but you need to duck out on this one. Your solutions don't work because they ignore the political realities... look at the minority government and the joke it has been. 3 independents GUARANTEED to lose their seats... all too spineless to say enough is enough.

[boss]

Phil's the bloke in the video - old enough to know better.

[ThePhil]

Well here's how it is going, this is an email I got on friday:-

Thanks for the email Phil, very interesting video.
On Monday I am meeting with the Treasurer Wayne Swan and the Assistant Treasurer David Bradbury about this issue.
I’m happy to pass on your views and experiences as a retailer, and quote you as one of our examples, if before then you can send me some dot points about what this issue means for you and your business.

Kind regards

Trevor


Trevor Evans
Chief Executive Officer
National Retail Association
6 Overend Street, East Brisbane QLD 4169
' 07 3240 0100 | 1800 738 245 7 07 3240 0152 | * t.evans@nra.net.au <mailto:t.evans@nra.net.au> | 8 www.nra.net.au <http://www.nra.net.au/>

You guys shouldn't be so negative, getting in and having a go is the Aussie way.
They ignored it because they don't think the public will stomach it and don't know how to educate them. So what's wrong with trying to help and being a bit positive about it, only took me half an hour looks like a pretty good return for a little bit of work.
I'm not sure these guys even have an agenda they just seem to do whatever is trending on twitter. Both of the big parties do occasionally get together on some issues, look at Superannuation, we never used to have that system just Government pensions, so things do happen, and this is nowhere near as big an issue as that.

Jimbos, I haven't articulated an answer more taxes or not, cos I don't really know the answer and that's a big ask, I'm just wanting to point out that the government charges just like the retailers are saying is quite a big problem, but this problem has been around for years, they could have tried something by now and be working through the problems.

[ThePhil]

Just one more post whilst you do your Christmas shopping.

Your Aussie retailers are just dying to take on the o/s competition. The days of isolating and wrapping up the Aussie market are over, now it's a world thing. And good riddance to insane mark ups. Also it's mostly the overseas brands that wrapped up the market by clever strategy, not the Aussie retailer, they are the ones that made the super profits.

But the Aussie guys just are not being allowed to compete.

They have 5-10% duty, then 10% GST and say 5% compliance, roughly 21% extra on the overseas guys.

So who would then take those handicaps and try and compete in an open market. All that investment in marketing and website just to show everybody you are 21% more expensive. That's why they cling to the old model, it's all the've got.

I have never met a retailer who does not want to beat his competition.

On the bikes, if it was a level playing field a number of bike shops would fold into one (Bunnings style) in each city and take on the overseas giants. With some bulk sea shipments they would beat them too. Prices would stay low as the overseas guys will always be there.

Would have happened years ago, at the same time as overseas shops got big.

Level playing field, level playing field, level playing field, that's all retailers have ever asked for.

Happy Christmas

[boss]

[blkmcs]

...
They have 5-10% duty, then 10% GST and say 5% compliance, roughly 21% extra on the overseas guys.
...

Happy Christmas

The 5-10% duty is on the import price not the retail price and the overseas sellers will have pretty much the same sort of impost.
Yes the 10% GST; paid by the end consumer not by the retailer.
Say 5% compliance, Say What? You do your argument no good by plucking numbers out of the air.
Every seller in every country has to comply with local laws, what evidence do you have that Australian retailers have to spend more on compliance than overseas retailers?

Oh and Happy Christmas, at least I can agree on that one.

[rkelsen]

Level playing field, level playing field, level playing field, that's all retailers have ever asked for.

They're on one.

What they really want is the table tilted in their favour...

[ThePhil]

The overseas sellers don't have any duty on under $1,000, it is all linked up with the $1,000 threshold. Don't you even know that? That's what you do, buy overseas and get it posted direct, no hassle, no paperwork, no fees and duty.

10% paid by the consumer, yea, but it's 10% extra you the consumer are paying compared to you getting it overseas.

Even if you get a whole container load of stuff at once it takes time to all the paperwork and pay the fees, then it takes time to do your BAS each quarter and pay the ATO and also claim back the GST inputs. 5% would be a very low estimate and nobody could work it out exact, most small businesses the wife does the BAS.

But its the same as the Government saying it's not worth the effort them collecting it (means 20ish % compliance), but it's OK for Aust retailers to burden the compliance costs, how about recognise it's not worth it for them either.

When they post if from overseas they do not have to collect that GST and duty off you, hence no compliance compared to what the Aussie retailer has to do. No pissed off wife! That has to be worth 5%.

How do you struggle with that concept? Imagine if you sell something to someone; your hand to theirs-easy, but a retailer does it; from himself, through Aust customs and ATO, then to you.

And I am very sure they want it tilted in their favour, everybody wants security, home ground advantage on bulk freight costs should do that, but only competition will keep people honest. They are just asking to be treated as per the overseas shops, nothing else. If you want to see real protection look at the car plant subsidies, $1,000's per car, just because they have the Governments ear.

These mega mark ups 300% compared to overseas, think about it, it's the Big International brands that isolated the Australian market, manipulated trade restrictions (still are if they can) and jacked up the prices. That's why retailers are saying, 'we can't even buy it for that', because the big mark ups went to the big brands, they just charged Aussies more for wholesale, they were never going to give the money to some little shop.

Your shooting the worker not the bosses.

[blkmcs]

The overseas sellers don't have any duty on under $1,000, it is all linked up with the $1,000 threshold. Don't you even know that? That's what you do, buy overseas and get it posted direct, no hassle, no paperwork, no fees and duty.

10% paid by the consumer, yea, but it's 10% extra you the consumer are paying compared to you getting it overseas.

Even if you get a whole container load of stuff at once it takes time to all the paperwork and pay the fees, then it takes time to do your BAS each quarter and pay the ATO and also claim back the GST inputs. 5% would be a very low estimate and nobody could work it out exact, most small businesses the wife does the BAS.

But its the same as the Government saying it's not worth the effort them collecting it (means 20ish % compliance), but it's OK for Aust retailers to burden the compliance costs, how about recognise it's not worth it for them either.

When they post if from overseas they do not have to collect that GST and duty off you, hence no compliance compared to what the Aussie retailer has to do. No pissed off wife! That has to be worth 5%.

How do you struggle with that concept? Imagine if you sell something to someone; your hand to theirs-easy, but a retailer does it; from himself, through Aust customs and ATO, then to you.

And I am very sure they want it tilted in their favour, everybody wants security, home ground advantage on bulk freight costs should do that, but only competition will keep people honest. They are just asking to be treated as per the overseas shops, nothing else. If you want to see real protection look at the car plant subsidies, $1,000's per car, just because they have the Governments ear.

These mega mark ups 300% compared to overseas, think about it, it's the Big International brands that isolated the Australian market, manipulated trade restrictions (still are if they can) and jacked up the prices. That's why retailers are saying, 'we can't even buy it for that', because the big mark ups went to the big brands, they just charged Aussies more for wholesale, they were never going to give the money to some little shop.

Your shooting the worker not the bosses.

Where to start.

You clearly misunderstand my post.
Overseas retailers will have to pay local import duties on the goods they import from China and then resell to Australia, I was not suggesting that they have to pay duty in Australia.

Yes I acknowledged that the GST is an extra cost to the consumer.

When a UK business exports it has to comply with the UK regulations including showing that the goods were exported and therefore free from VAT, once again I am not suggesting they have Australian based compliance costs but they still have compliance costs.

If a small business is spending a lot of time administering GST and completing the BAS then I can only assume a high level of incompetence on the part of the business operator. There are many simple accounting systems available that will churn out the required reports on demand, all the business has to do is keep the system updated with purchase and sales information. I realise of course that many small businesses want to hide some of their sales from the ATO and that they then blame the ATO for the extra work this involves. ALL businesses have to deal with the costs of maintaining adequate records this is not unique to Australia!

[ThePhil]

OK so I take it you mean; say a UK retailers has to pay his local duties to get the stuff from China to UK, then he ships it to us.
If an Aussie was to get it straight from China, then basically same deal, he just deals with the Aussie stuff, OK cool.
The extra bit would be just collecting the gst from customer and remitting to ATO, so a little bit extra.
The drama also is, say UK had no duty on something like maybe (and I really don't know just example) clothes, but Aust has 10%. Puts them ahead, but could go the other way too.

UK VAT free compliance, bit of paperwork, OK I didn't think of that.
But will be a bummer when wiggle etc, just set up straight from China to Oz.

Heaps of small business uses myob, seems to be the one everyone knows how to use and it's made for Australia, pretty easy to use too. Tax fraud is a totally different issue and offenders should be jailed for theft. But with adding up all of the costs, working out which ones may be gst exempt, going through every docket, it's a bit of work, 2, 5, 7, 3% compliance you'd have to be pretty anal to work it out, but there is still significant more costs than just doing your tax once at the end of the year like before GST. And think how depressing it is that some guy is remitting all that gst revenue to the ATO at the same time as knowing he is going broke because now he is competing on the international stage and may not even be able to buy his goods at the same price as the UK guys (remember our high prices are a hangover from when the brands were able to control the Oz market). It's a bad joke.

If the gov't said, 'hey fella's this whole collecting gst on anything under $1,000 is not worth the effort' don't worry about it, small Aussie retailers would be extremely relieved, and have a level playing field.

[biker jk]

If the gov't said, 'hey fella's this whole collecting gst on anything under $1,000 is not worth the effort' don't worry about it, small Aussie retailers would be extremely relieved, and have a level playing field.

Even if the $1,000 exemption from the 10% GST was abolished the domestic retailers would still not be competitive as their prices are usually 20%-50% higher than their foreign competition. You need to focus on getting a better deal from wholesalers, landlords and reducing wage costs. To be honest, my view is that there are too many retailers in Australia. This followed the consumer spending boom from the early 1990s to the GFC in 2007-8. Those days are over and will never return. So the Australian retails sector is bloated from those bygone days of 5%-6% volume growth and now needs to shrink.

[ThePhil]

Even if the $1,000 exemption from the 10% GST was abolished the domestic retailers would still not be competitive as their prices are usually 20%-50% higher than their foreign competition. You need to focus on getting a better deal from wholesalers, landlords and reducing wage costs.

It's not just the GST the overseas guys are exempt from it's also the duty, often 5%, so that's 15%, then there is a fee for the paperwork of $55 which is not a percentage but a flat fee. The bitch is that you just can't get a better deal from the wholesalers, they are the ones that set out to control the Oz market in the first place, they probably own some of the bigger o/s shops, so there is no incentive for them to share their wealth with some Aussie guy. Mind you there is a flipside here, a Brand would be saying our superior, designs, marketing and price/shop control has made you (the retailer) a rich man. But those days are way over.

Landlords; market rates set that, the dozens of retailer I know have got the best possible deal for themselves or moved at the end of their leases, that's a free market any negotiation has bugger all to do with it. Would you drop your rent rates just because somebody asked? Just because you liked them?

Wage costs; retail workers are already the working poor, most small shop owners I know wish they could remunerate their employees more, closer to the average wage. The only way you could get the ratio down is to sell a lot more stuff, but you aint going to do that with higher government costs than your competition. My personal opinion is that there should be a much higher minimum wages less of the 99% wealth with 1% of the population stuff.

To be honest, my view is that there are too many retailers in Australia. This followed the consumer spending boom from the early 1990s to the GFC in 2007-8. Those days are over and will never return. So the Australian retails sector is bloated from those bygone days of 5%-6% volume growth and now needs to shrink.

Never a truer word was spoken, for whatever reason, those big o/s guys have serious economies of scale on their side, it's just the way say hardware stores went with Bunnings, or electrical stores with JB's. There will be consolidation, some shops want to do it, it's the future, but nobody will do it if you have even an extra 5% cost disadvantage (would you?), so we are slowly losing an entire industry just because the Gov't is to lazy to tweak their tax policy.

[DavidS]

ThePhil, you keep laying the blame at the feet of government: GST (I have problems with the GST but they are for other reasons), compliance costs (whatever they are) and duty. Yet at the same time you acknowledge but appear not to lay so much blame on the wholesalers. To be frank, the days of wholesalers are numbered. We see this in many goods sold in Aus. I see it in HiFi where I have noticed a few places selling equipment they import, in effect the retailer is the wholesaler. Retail in the bicycle sector needs to join together (unionise??) and force the price they buy goods for down. When a retailer says they can't get goods from their wholesaler at a price we can buy from an online retailer, then it is time the local retailers get together and force the wholesale price down, or they will go down. The current wholesaler to retailer model is uncompetitive and unsustainable. When I can buy something made in Asia, shipped across the world to the UK (a high wage high cost economy), and shipped back, past Asia, to Australia, for less than the same good shipped direct to Australia (closer to Asia than the UK) then there is something seriously wrong. This will change - the choice for retailers is whether they can force this change before they go out of business as online retailing will and is forcing the change.

DS

[ThePhil]

Compliance costs are:-
1. There is a flat fee of $55 for filing out the import forms, doesn't matter what you get $10 or $10,000.
2. The work in filling out all the paperwork to tell customs what you have imported, so you may have a full container with lots of different items all with different duty amounts, its stacks of work and you need to know the right codes for everything, compared to when an o/s retailer just sends you something he does not need to do this.
3. Then going through your import invoices to work out what your gst inputs are and claim them, harder than it should be however, for example DHL won't automatically send you the customs invoice, you have to request it, it's cos as its a customs invoice they are not obliged to send it on, it's just more work for them and most customers don't need it anyway.
4. Then collect the gst off the customer and remit it to the ATO.

Wholesalers:-
Yea I left this whole middleman out, they are getting phased out pretty quick, almost a thing of the past already, no room for that. So yea, as you have noticed the retailer is the wholesaler, it will all be like this very soon.

Retailers joining together:- Thats the future and what they want/have to do, but if you have higher costs than your competitors (the overseas shops) there is no point doing it. Forcing the price down, how? you would need to get it 20% cheaper than the rest of the world just to combat the Aust Govt charges to be even with the competition.

So yea, like you say, there is something seriously wrong, Govt needs to tweak their tax/duties policy to provide a level playing field and at least give these guys a fighting chance. Why any Australian business should have to lecture Govt not to give tax breaks to overseas shops is beyond comprehension.

[Ross]

Interesting debate. As a consumer I am not in favour of the govt introducing the collection of GST on <$1000 import - the govt say they have already looked into it and it will cost more to collect than what they will earn - so how do govts in other countries do it then? I believe it is just a political hot potato and govt/opposition both know there would be a huge public backlash if they did introduce such a scheme and it would be political suicide for a govt that did implement it. So the govt decides it's not worth the fallout and put the issue in the too hard basket but then they run the risk of upsetting big hitters like Gerry Harvey and Solomon Lew who will buy more race horses instead of "donating" money to the political parties. And then if too many retailers go broke and the workers are forced onto govt benefits then this is bad for govt's bottom line. It's quite a complex issue when you start scratching beneath the surface.

[boss]

Compliance costs are:-
1. There is a flat fee of $55 for filing out the import forms, doesn't matter what you get $10 or $10,000.
2. The work in filling out all the paperwork to tell customs what you have imported, so you may have a full container with lots of different items all with different duty amounts, its stacks of work and you need to know the right codes for everything, compared to when an o/s retailer just sends you something he does not need to do this.
3. Then going through your import invoices to work out what your gst inputs are and claim them, harder than it should be however, for example DHL won't automatically send you the customs invoice, you have to request it, it's cos as its a customs invoice they are not obliged to send it on, it's just more work for them and most customers don't need it anyway.
4. Then collect the gst off the customer and remit it to the ATO

None of this is required for imports under $1000. You're sexing it up.

[ThePhil]

None of this is required for imports under $1000. You're sexing it up.

How can you say that? if you get $100,000 grand of stuff in a container, made up of lots of items you are not gst exempt???

Collecting the money would be so profitable, the parcels come in, they have paperwork attached (put on by the exporter, like they do now for over $1,000) says on it the duty and gst amount, then the consumer pays that as he picks it up. Or if you do it all the time you just have an account with the Customs office.

Currently the shops have to go through all the crap of collecting under $1,000 but the Govt is saying, not worth it for us, in Labor/Union terms they are being scabs.

[boss]

None of this is required for imports under $1000. You're sexing it up.

How can you say that? if you get $100,000 grand of stuff in a container, made up of lots of items you are not gst exempt???

Collecting the money would be so profitable, the parcels come in, they have paperwork attached (put on by the exporter, like they do now for over $1,000) says on it the duty and gst amount, then the consumer pays that as he picks it up. Or if you do it all the time you just have an account with the Customs office.

Currently the shops have to go through all the crap of collecting under $1,000 but the Govt is saying, not worth it for us, in Labor/Union terms they are being scabs.

Because VAT is 20%.

[ThePhil]

We don't have VAT??

[il padrone]

Bunging on a bit of GST (10% extra cost) is really going to be 2/5 of stuff all in its impact on my overseas on-line buying. Australian retail prices are so inflated that a measly 10% extra cost for overseas product will be insignificant. Aussie retailers need to hammer their distributors to lower their prices; or the Federal Government & ACCC needs to run an inquiry into the distribution monopoly model, and outlaw it.

[boss]

We don't have VAT??

You're retarded. Seriously.

Whinging about GST being applied on imports, blah blah blah.

In the United Kindom, imports attract a minimum of 20% VAT.

Do your research, stop posting alarmist crap on here, and do you even ride a bike?

[il padrone]

But lobbying the Government for a level playing field regarding just taxes and charges can only be a good thing, most people don't know the hidden charges, how could they?
Overseas guys Wholesale $100 then say 33% mark up, $133.
Aussie guy $100 then 5% Duty, $105, then IPDC $49, $154, 33% mark up, $205, then gst, $225.

I knew there was something fishy about that video. A taxes equating to 54% + GST just didn't gel with what I've experienced myself commercially importing goods.

IPDC. Import Processing Declaration Charge.

Cost - between $9 and $70. Per shipment imported. Not per item.

The Aussie Guy that you refer to surely would not be importing his stock one piece at a time. Surely.

Therefore, you are not talking a whopping 49% tax (using the $49 called out in previous calcs) on a $100 item. If the importer is importing 100 items, it costs them... what... 49 cents to process that item. 1000 items - and now we are talking commercial quantities - 4.9 cents.

So the real figures are something more like $100 + $5 duty = $105, $105 + IPDC $0.49 = 105.49, 105.49 + 33% mark-up = $140, $140 + 10% GST = $154. Far cry from $225, and not that far off $133... and not that bad when you include the fact you're going to get local warrantee, etc.

So, just to re-iterate. We are talking $133 for an overseas supplier, $154 for an Australian supplier. $21. Taaahhhhh-wenty-one dollars.

Plus the Overseas guy has generally got a VAT (in Europe at least), so:

Overseas guys Wholesale $100 then say 33% mark up, $133, then VAT (20%) $159

Retail in Australia is looking pretty favourable - should be $5 cheaper. Why can't they make it work??