Government backdown on online shopping tax

THE Federal Government has backed down from an unpopular plan which would have seen Australian consumers slugged extra for shopping.

THE Federal Government has backed down from an unpopular plan which would have seen Australians pay more for products bought online.

The Australian reports cabinet ministers have rejected a proposal to charge a fee on goods bought from overseas internet retailers, amid concerns it would have been seen as a hit on consumers.

The move was reportedly proposed as an interim solution while agreement was sought with the states on lowering the current overseas online GST threshold of $1000.

With more than 36 million parcels coming into the country each year, the charge could have raised hundreds of millions of dollars over the four years of the budget forward estimates.

But according to The Australian, the move was dumped in favour of working out a longer-term solution with the states.

Assistant Treasurer Josh Frydenberg made the case for the change earlier this year, arguing local retailers were operating “with one hand tied behind their backs”.

Reacting to the news, independent Senator Nick Xenophon said the government had “missed an opportunity to level the playing field for small retailers, and with it supporting jobs for small businesses”.

Matt Levey, director of campaigns and communications at Choice, said the consumer group remained broadly committed to evening out the GST playing field but only if it could be applied in a workable manner.

“The idea that a 10 per cent price differential was going to sway people one way or another was a bit misguided, but it’s something the local retail lobby often puts out there,” he said.

“But we think it’s fair enough to say the GST should apply equally. The problem was all the associated costs and red tape that would come with applying the GST in places where Australia doesn’t have tax jurisdiction.”

A number of reviews have found that the cost of collecting the extra tax would outweigh the revenue generated, although the government argues the costs of administering the tax will come down as technology improves.

“Some of the propositions would have simply seen the retailers passing on the collection costs. You can’t load that onto consumers,” Mr Levey said.

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Originally published as Government backdown on online shopping tax