Online tax to recover GST

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Online tax to recover GST

Postby birdbrain » Sat Dec 22, 2012 4:29 pm

Sorry if this has already been posted and the admins can remove it at their discretion. To me it is more about our useless government desperately trying to increase their tax receipts. Retailers ripped us off for years and I have no sympathy for them. If they can't compete maybe they need to change their business model as some already have and are supported by the public.

FIRST ON 7: Secret Treasury documents reveal plans to introduce a new tax for online shopping.

It's one of several proposals the Government is considering in the hopes of reclaiming more than a billion dollars in lost GST.

Retail stores continue to struggle outside of the annual Christmas shopping spree, with sales sluggish throughout 2012. The outlook is much brighter online, where business is booming.

Australia Post report they have seen an 11% increase in parcels handled this Christmas, largely thanks to shoppers purchasing goods online, often from overseas sellers.

Doing away with bricks-and-mortar shop fronts is one reason online retailers are able to offer such competitive prices, but there is another explanation: shoppers are not required to pay tax on purchases of less than $1,000.

Treasury documents show the tax loophole is costing the Commonwealth some $1.5 billion dollars in lost revenue. And it's foreign companies taking advantage, having gobbled up 40% of the online shopping market share.

The government has investigated introducing a GST for all online shopping, but treasury documents show imposing the tax would be close to impossible and would cost far more to administer than it would ever pull in.

Based on current sales, an online shopping GST would generate $600 million, but cost well over $2 billion dollars.

Instead, the tax office hatched a plan for a flat 10% tax when Australian dollars are changed into foreign currency, such as in an online international purchase.
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by BNA » Sat Dec 22, 2012 5:14 pm

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Re: Online tax to recover GST

Postby Baalzamon » Sat Dec 22, 2012 5:14 pm

birdbrain wrote:
Instead, the tax office hatched a plan for a flat 10% tax when Australian dollars are changed into foreign currency, such as in an online international purchase.


But what will they do when consumers start using paypal more which does the conversion for them and currency comes out of their bank in Aussie $$$
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Re: Online tax to recover GST

Postby il padrone » Sat Dec 22, 2012 5:23 pm

And bigger picture - how will they deal with the backlash from all the Australian firms forced to add yet another 10% to their material input costs :roll: . Every overseas purchase requires a currency exchange.

Then there are all the Australians travelling overseas, required to pay a 10% tax on their currency exchanges.
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Re: Online tax to recover GST

Postby John Lewis » Sat Dec 22, 2012 6:40 pm

I've not seen anything since but a few weeks back an article in The West Australian stated that the Govt would change the current $1000 level at which GST now applies down to $100 early in the new year.

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Re: Online tax to recover GST

Postby JustJames » Sat Dec 22, 2012 7:10 pm

As many have said, people don't buy overseas to dodge the 10% GST. They buy overseas because the savings are mahoosive.
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Re: Online tax to recover GST

Postby Mike Ayling » Sat Dec 22, 2012 7:26 pm

John Lewis wrote:I've not seen anything since but a few weeks back an article in The West Australian stated that the Govt would change the current $1000 level at which GST now applies down to $100 early in the new year.

John


It is a cost/benefit analysis scenario - it would cost more in wages, stationery, postage and computer resources to collect the $10 GST levied on a $100 import.
Mind you it would create a lot of new jobs in Customs!

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Re: Online tax to recover GST

Postby il padrone » Sat Dec 22, 2012 7:30 pm

And it's always sooo beneficial to our retailers having a massive bureaucracy.

:roll: :roll: :|
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Re: Online tax to recover GST

Postby AUbicycles » Sat Dec 22, 2012 7:53 pm

Online Taxes have been raised a number of times by the government and has always been a way for the government to try and gain profit from something which is questionable as a revenue source.

I equate it to overseas countries that have television and radio taxes/charges that are seperately collected. You are required to register and pay the rates and collection agents visit people to try and catch them out - a lot of people try and avoid these charges but the collection agents also are sneaky in catching people. It has an advantage that theoretically you are charging for usage but realistically is becomes bureacratic and funding also comes from the government direction. In Australia and countries that allocate funding 'for the arts' from taxes it removes the entire collection and administration however also means that the arts suffer when there are budget cuts.

For online taxes, how do you distinguish between business and private. What about a business with 1000 employees verses 2? What about a business with 1000 employees, but on a production line where only 5 use the internet. How do you, or do you distinguish between volume usage.

I see the online tax as being flawed in many ways and the government needs to create incentives, simplify taxation and bureacracy and encourage business. By encouraging online business (who pay their taxes) and reducing the hurdles for business and customers, they achieve the same results that don't become a 'limiting' factor. I realise that this is a complex discussion.

Also, this is different from the GST threshold, though as mentioned already, and confirmed in a survey in the BNA forums, reducing the threashold won't change spending patterns if the price differences are significantly higher.
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Re: Online tax to recover GST

Postby wombatK » Sat Dec 22, 2012 10:07 pm

What everyone spruiking this line forgets is that while the government might be losing 10% in GST, the banks have been raking in a fortune on the currency exchange charges - often as much as 3% or more. So it's not 10% that's making the difference for retailers - rather something below 7%, and that isn't much compared to normal retail margins. When you take into account courier charges (particularly from some of the dearer countries outside UK and HK/China), there's even less difference.

Of course, if the government was really looking for ways to raise more GST, there's probably more turnover in other currently GST free transactions - like the second hand goods market (ebay, gumtree etc.,.). If only people couldn't buy second hand goods so easily, there'd be far greater sales of new goods in retail outlets etc.,. So why not slap at least a 10% GST on all that too while there at it - or for good measure ban it totally.

After all, as every good Japanese person knows, second hand goods will bring you bad karma. And thinking about it, where would the druggies get there money from if they couldn't sell what they'd flogged ? There's a very good chance we could kill two birds with the one stone here :)
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Re: Online tax to recover GST

Postby DavidS » Sun Dec 23, 2012 12:04 am

Taxes are for raising revenue, not spending revenue. A tax which loses money makes no sense. Add to that the backlash any government would get if it changed the threshold and I really can't see this happening. In any case, if they just leave the threshold at $1,000 then inflation will reduce the threshold in real terms over time.

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Re: Online tax to recover GST

Postby il padrone » Sun Dec 23, 2012 7:13 am

An interesting take from Crikey on the 'equity' of applying GST to low-value imports, and the motivations of business campaigners.

Touche!
Online purchasing, whether it is from Australian or foreign websites, will transform retail in the coming decades, delivering lower prices, greater choice and, almost inevitably, fewer local retail jobs. The big retailers “in principle” concern for such jobs would be more convincing if they hadn’t been so busy installing self-serve check outs in their outlets and importing foreign-made products.
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Re: Online tax to recover GST

Postby boss » Sun Dec 23, 2012 7:15 am

Baalzamon wrote:
birdbrain wrote:
Instead, the tax office hatched a plan for a flat 10% tax when Australian dollars are changed into foreign currency, such as in an online international purchase.


But what will they do when consumers start using paypal more which does the conversion for them and currency comes out of their bank in Aussie $$$


PayPal has an Australian banking license and would have to pay currency conversion taxes. No doubt this would be passed on.

With the tax base andreenues dwindling the government really needs to look at structural reforms.
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Re: Online tax to recover GST

Postby birdbrain » Sun Dec 23, 2012 10:26 am

Jimboss wrote:
With the tax base andreenues dwindling the government really needs to look at structural reforms.


The government needs to stop wasting money and live within its means.


Instead, the tax office hatched a plan for a flat 10% tax when Australian dollars are changed into foreign currency, such as in an online international purchase.


Judging by the comments here the tax office might have hatched an egg :wink:
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Re: Online tax to recover GST

Postby il padrone » Sun Dec 23, 2012 10:40 am

jimboss wrote:With the tax base andreenues dwindling the government really needs to look at structural reforms.

Compared to other OECD nations Australia has one tax omission - we have no wealth tax.

Our estate and inheritance taxes are non-existant
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A tax on accumulated capital assets, land values, or on the value of personal estates is used by most other nations. There is an argument that applying a land-value tax solely, could very effectively do away with all income taxes and indirect taxes (including GST).
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Re: Online tax to recover GST

Postby wombatK » Sun Dec 23, 2012 12:01 pm

il padrone wrote:A tax on accumulated capital assets, land values, or on the value of personal estates is used by most other nations. There is an argument that applying a land-value tax solely, could very effectively do away with all income taxes and indirect taxes (including GST).

Think you missed a major point in the Crikey article. The property developers who lease their buildings to the Harvey Normans and local retailers are part of the crowd howling about the 10% GST. Property developers have long been the mainstay of contributions to local politicians campaigns (on both sides) and spend significant time glad-handing politicians. They'd howl so loud about a wealth tax that you'd probably hear it from the moon - and you certainly would hear all those Chinese property investors that have been buying up here (without them leaving China, a country notably absent from your wealth tax list).

Doubt that it would ever get up, but maybe it might be a good ambit to shut them up over the GST.
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Re: Online tax to recover GST

Postby Xplora » Mon Dec 24, 2012 6:19 am

il padrone wrote:A tax on accumulated capital assets, land values, or on the value of personal estates is used by most other nations.

NSW has land taxes based on investment properties already :?: The wealth tax you table is going to do almost nothing to our economy. It certainly hasn't saved the USA from structural collapse, or Spain...

The likelihood of getting a land tax up on all property in Australia is absolutely laughable, given the current dreams and aspirations of the stereotypical Australian. Quarter acre block and a dog out the back doesn't gel with everyone paying land tax.

Either way, GST is a great tax, and doesn't need a lot of rejigging. Put a flat fee on each importation (say 5 bucks) to encourage bulk imports, and levy the 10%. The 5 bucks will close the gap dramatically for the Customs "loss making threshold". You have to even up the field somehow... Australian shopping is expensive because we are an expensive country. Can't give a free kick to OS competitors, if they beat us anyway well that's tough for us.
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Re: Online tax to recover GST

Postby queequeg » Mon Dec 24, 2012 1:39 pm

Xplora wrote:NSW has land taxes based on investment properties already :?: The wealth tax you table is going to do almost nothing to our economy. It certainly hasn't saved the USA from structural collapse, or Spain...

The likelihood of getting a land tax up on all property in Australia is absolutely laughable, given the current dreams and aspirations of the stereotypical Australian. Quarter acre block and a dog out the back doesn't gel with everyone paying land tax.


we already have a land tax anyway. it's called stamp duty. I made my $32,000 donation to the govt last year.
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Re: Online tax to recover GST

Postby elStado » Tue Dec 25, 2012 4:12 pm

JustJames wrote:As many have said, people don't buy overseas to dodge the 10% GST. They buy overseas because the savings are mahoosive.


Yep. E.g. buying a Tubus rack from UK was around $110 on sale including shipping arrived in 4 days. In comparison from a large local store it was going to be $300 plus shipping and would take around 2 weeks as they don't stock it usually. Even if they add GST to online sales it will still be far more cost effective and convenient to buy online from OS retailers... stores have to step up or move on.
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Re: Online tax to recover GST

Postby il padrone » Tue Dec 25, 2012 5:22 pm

elStado wrote:Yep. E.g. buying a Tubus rack from UK was around $110 on sale including shipping arrived in 4 days. In comparison from a large local store it was going to be $300 plus shipping and would take around 2 weeks as they don't stock it usually.

Crikey, whoever gave you that price was on a hiding to nothing :shock:
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Re: Online tax to recover GST

Postby stanevelyn » Wed Dec 26, 2012 2:28 pm

Included in the price of anything you buy are the staff wages, advertising, packaging, storage, and other costs. i.e. you pay all the expenses for the retailer.This is a basic marketing business model. The GST is no different. It is a tax levied on the business, not the consumer, however all businesses pass it on to the customer to pay for them.

If the customer is paying all the expenses that a business incurs to provide the customer with the goods they purchase, then there should be no case for businesses to complain against the GST threshold, just as if all business expenses are paid by the customer, why do they claim their expenses on tax when the customer has already covered these costs?

Is this a legitimate case or are we all being duped into thinking that business have to pay their own expenses. I feel that competition is good for the consumer, and if big business doesn't like customers purchasing online overseas, then perhaps they should rethink their exorbitant profit margins rather than try to bully consumers into working to their agenda.
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Re: Online tax to recover GST

Postby boss » Wed Dec 26, 2012 3:29 pm

stanevelyn wrote:Included in the price of anything you buy are the staff wages, advertising, packaging, storage, and other costs. i.e. you pay all the expenses for the retailer.This is a basic marketing business model. The GST is no different. It is a tax levied on the business, not the consumer, however all businesses pass it on to the customer to pay for them.

If the customer is paying all the expenses that a business incurs to provide the customer with the goods they purchase, then there should be no case for businesses to complain against the GST threshold, just as if all business expenses are paid by the customer, why do they claim their expenses on tax when the customer has already covered these costs?

Is this a legitimate case or are we all being duped into thinking that business have to pay their own expenses. I feel that competition is good for the consumer, and if big business doesn't like customers purchasing online overseas, then perhaps they should rethink their exorbitant profit margins rather than try to bully consumers into working to their agenda.


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Re: Online tax to recover GST

Postby stanevelyn » Wed Dec 26, 2012 3:59 pm

I don't drink.
And I would rather buy all my bike parts from overseas rather than here. After all it is my money, and I won't have business or anybody else tell me how and where to spend it. I know that businesses pass all their expenses on to the customer, including GST. I'm not denying anybody an income or profit, just that when mark ups on cycling goods are very high locally, I shop elsewhere. And if O/S is cheaper then there I will shop, GST or not.
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Re: Online tax to recover GST

Postby redned » Wed Dec 26, 2012 4:58 pm

What I find odd is that during the tech-boom in 2000, which shortly became the tech-wrech, the internet-as-market model was being promoted as the new age answer to everyone's problems. Business and consumer were going to benefit by everything being on-line. Now that we are there, retailers are complaining that their old-fashioned business model doesn't work. Their problems are not caused by no-GST on low value items.
Coming into an election year, I wouldn't put it past the government extending GST to low value items, fudging the cost-benefit.
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Re: Online tax to recover GST

Postby boss » Wed Dec 26, 2012 5:30 pm

stanevelyn wrote:I don't drink.
And I would rather buy all my bike parts from overseas rather than here. After all it is my money, and I won't have business or anybody else tell me how and where to spend it. I know that businesses pass all their expenses on to the customer, including GST. I'm not denying anybody an income or profit, just that when mark ups on cycling goods are very high locally, I shop elsewhere. And if O/S is cheaper then there I will shop, GST or not.


You sure?

You completely missed the point with GST - of course a shop will pass GST on. If not they are making less money. The point of GST is that it will be passed on.

While business can claim GST on input costs, the GST on sale price goes to the government. Sure it's near on zero sum for the business in terms of tax flow - it will either increase price or decrease profit.

As much as i hate to say it, retailers have a legitimate gripe that parcels under $1000 avoid tax. HOWEVER, many would be deluded to think that GST on imports would make them instantly competitive. Although I think the 'pain in the ass' factor may influence some people away from O/S stores.

End of the day, Australia is a much more expensive place to do business. Wages, property, etc are all much steeper than o/s. Let alone size of our market.

I understand and sympathise with your 'I shop local when it makes sense' and 'tacking GST onto imports wouldn't change my behaviour' sentiments but your first post really missed the mark.

redned wrote:What I find odd is that during the tech-boom in 2000, which shortly became the tech-wrech, the internet-as-market model was being promoted as the new age answer to everyone's problems. Business and consumer were going to benefit by everything being on-line. Now that we are there, retailers are complaining that their old-fashioned business model doesn't work. Their problems are not caused by no-GST on low value items.
Coming into an election year, I wouldn't put it past the government extending GST to low value items, fudging the cost-benefit.


I would be super surprised if we saw the Gillard government introduce a new tax. The pressure from retailers would not outweigh the negative reaction from the wider electorate, or simply the 'big fat tax' fuel the liberals would gain.
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Re: Online tax to recover GST

Postby il padrone » Wed Dec 26, 2012 6:00 pm

This sort of grand offer is a symptom of the problems with Australian retail.

Kathmandu wrote:If you spend $100.00 or more with us in a single transaction, we will deliver this to you for FREE! Under this and your delivery will be charged at $10.00.


On-line stores in the US will do free delivery nationwide, regardless of value of spend. Wiggle's free delivery for >$80 is for international shipping. They see it as a big step but it still doesn't cut the mustard, and Kathmandu is no small player.
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