An OECD proposal would see a flat tax applied to low-cost consumer sales made online.
Picture by Charlie Brewer
The Age reports on the OECD report, which suggests that overseas suppliers should be required to register for sales taxes in countries where they ship goods as the “most effective” way to tax those sales.
Rather predictably, Gerry Harvey has his piece to say in the Age report, as he’s a fan of the proposal, calling the current state of the play with GST, where sales under $1,000 are GST exempt, a “rort”. Other local retailers are in favour of the move, although as we’ve seen previously, the pricing picture for local goods often has larger problems than just GST inclusion.
The OECD discussion paper is out for consultation until February, and as the Age notes, any changes to GST would need the full support of all states to pass into Australian law.
Online digital goods could be subject to GST under OECD global plan [The Age]
Comments
21 responses to “Online Sales Could Be Subject To GST Under New Proposal”
so lets see, the retailers buy their products from overseas, in bulk, cheaper then what a consumer can, mark them up 250+ percent, and then complain when we the consumer would rather shop overseas.
Would like to know where you got 250% from because i can assure you its not even close.
He’s pulling an absurd number out of thin air. But certain things are simply more expensive here because.
iTunes is pretty much 70% more per song than the US. Although it might be a bit better since our Dollar has fallen.
I think he is because i worked in Retail couple years ago and the place i was at was only working on a 30% markup. So a product came in and its retail was $499.00, the cost of the product was $349.00 so sell it for $499.00, you got $150.00 profit. Thing is you would be selling it for $449 or less and making minimal profit to compete with the other stores. Then online comes in and its $349.00 which gives you no profit. If there’s anything to complain about its how much rent you have to pay here and how good the wages are compared to overseas. Not saying that all stores work on a 30% markup as i do wonder when i walk past jewelery stores and you see there sales 50%-70% off and they’re still able to make a profit off that but certainly dont throw all businesses in the same boat.
It’s not too far off the mark for some purchases. There have been times when I’ve found we pay 2-3 times more for things in Australia than buying it online from overseas. Part of the problem would be exclusive distributor deals where distributor imports a product and doubles the price they charge to the retailer and in turn the retailer doubles the price they charge. Consumer law may be responsible for some of the mark up in some cases, but in other cases like books, I don’t see consumer law being too much of an issue. Sites like Amazon and Book Depository are still a lot cheaper than bricks and mortar stores in their respective countries, but even buying books from bricks and mortar store sin the UK was much cheaper than here.
I cannot see how any country would be able to enforce such a system. Small online retailers selling to lots of different countries wouldn’t be able to handle the administrative overheads. It would be a nightmare for them.
And how would anyone know if I had bought something from an overseas supplier and not paid GST? It’s one thing for countries to agree in principle to such a system to protect their domestic retailers and raise more tax revenue, but it’s another to implement an enforcement system. Australia has been trying unsuccessfully for years to work out a cost-effective way of collecting GST on imports, and I don’t see that this proposal will solve it.
All this will do is push up prices from mainstream suppliers, like Amazon, while encouraging people to buy from smaller online retailers that can avoid the tax. It won’t just be the cost of the tax, but also the costs of administering it. So a 10% GST may well end up costing much more.
It will. It has been proposed many times before even with labor governments and gets shot down by treasury. The cost of regulating it far out weighs the benefits.
I think Choice looked into the matter and found that it can be enforced. But they found that for every $5 raised, $3 or more would be incurred just to collect that $5.
Either way, if Harvey think this will stop people shopping online then he’s in for a shocking wake up call. Like many others, even if this move goes ahead I will still continue to shop online as the 10% tax is not going to hide the remaining 240+% markup local retailers are applying.
If anything, this is likely to cause people to shop online even more as a massive “Screw You!” to retailers (based locally and abroad) who refuse to accept the days of using Australia as a cash cow are long over.
exactly, it’s completely unworkable.
So small volume and boutique goods cease to exist, or may as well cease to exist as nobody outside their original country can ever access them. What an absolutely idiotic proposal.
So.. I take it I could just order something, have it sent to a place with the lowest possible tax that has a parcel forwarding service, and then get my stuff sent to me?
Whenever Gerry Harvey is for something you know it is bad for Australian consumers. Harvey Norman is one of and possibly the single biggest Australian rip off
He has strong competition, Foxtel, Apple, Valve, Telstra.
As long as it’s above the break-even point for the tax, I have no issue with it being collected. But with both the OECD and Gerry Harvey saying it’s a good idea, it’s most likely a really stupid one.
Heh..! Gerry Harvey complaining about rorts… Talk about a hippocrit..! 🙂
He’s stores still serve a very good purpose.
You go in, see what is on display, get the model number, and then get the newer, better model for one third of the price from Amazon based on your experience with the prior model, :-P.
“Looks great, do you know if this available on Amazon?”
When I buy a Product for $50 online GST will add $5 so my Total will be $55. Harvey Norman still sell it for $150 including GST and still don’t see me walk through their doors.
I only went in there because a friend insisted we have a look, he of course realised his mistake later at JB when the prices of the TV’s where massively cheaper. $500ish on the higher end TVs he wants.
Gerry Harvey who I consider (perhaps wrongly) to be the driving force behind this tax, can’t compete with the prices local stores have, what makes him think he can compete with online stores that have merchandise for 50% or less of what good retailers sell it for?
I hope the Government don’t do this, I see it as a break even tax at best where the implementation and enforcement costs as much as they make from it. And at worse it’s a tax that loses money. But at the end of the day I feel this is taking choices away from the Australian people to benefit wealthy old fools who can’t adapt to the modern business models or simply helps huge conglomerates have healthy profit figures which don’t end up back in Australia.
JB’s sticker price on TV’s is definitely lower, however their wiggle room is bugger all. Got my last TV for $800 less than I could of from JB thanks to Harvey’s. Just avoid the old men salesman, young blokes don’t care how much of a discount they give you, as long as they get the sale.
There’s the problem than, the local Harvey all seem to be exclusively staffed by the old man style of salesman. Or the young guys completely shaped by the old guys.
I am obviously out of the loop.
When someone makes a sale on Ebay, you pay money directly to them via PayPal. When the sale is successful, Ebay send the merchant a bill for their cut of the process. Am I right so far?
If the site is Ebay.com.au then Ebay have just made a profitable action, in Australia. Are we suggesting that the Australian branch of Ebay – aren’t paying their GST?
Are we also suggesting that ANY time a person in Australia sends ANY money overseas, the Government want a percentage in GST? How does this compare to current banking “Transaction fees”?
If a foreign-owned company sends profits overseas, would that be subject to GST? Since the company already paid their GST, isn’t that double-dipping?
So let me get this straight. I want two products. Product A is slightly cheaper online but I don’t mind giving the business to a local retailer. Product B is so much cheaper online that it’s silly, and I can’t afford to buy locally. With GST added to B (which I could only buy online), that takes away from me the little extra I had which I was willing to spend on A. So now I’ll just buy them both online because A is probably still a tad cheaper, and I now have less money anyway thanks to B+GST. Total effect: local retailers get less of my business. Well done Mr Harvey.