GST hike on overseas online goods appears likely

BETTER get all your online shopping out of the way soon. If the government has its way, it might be about to get rather expensive.

You might have to leave it on the keyboard. Picture: Thinkstock

MAKE the most of your online overseas Christmas present purchases this year, because next year you may be paying 10 per cent more for them.

Major retail companies and the state governments believe the Government will impose the GST on overseas buys as low as $20.

The current GST-free threshold for online buys is $1000.

"We certainly think that we are now at the point (where) it's no longer `Why?'," said Margy Osmond, chief executive of the Australian National Retailers Association.

"It's a case of how and when and that governments both state and federal have accepted the need to go ahead with this.'"

Mrs Osmond told news.com.au the breakthrough came during discussions between Treasurer Joe Hockey and state treasurers in Canberra today.

The states believe they could share around $1 billion or more in GST funds each year if the tax was applied to online shopping.

"It was a very positive discussion, it is clear there are a lot of consensus across the room. We need to do this,'' said NSW Treasurer Mike Baird.

The states and the Federal Government will meet again on the issue next March to discuss how the levy can be imposed, given the huge number of overseas purchases arriving by air and sea at ports around the country.

Mr Hockey has been told by Treasury the collection costs could exceed the revenue.

However, Mrs Osmond said research commissioned by her association calculated a collection cost of $34 million in the first year, and revenue of $997 million.

"And that's a lot of hospitals, roads and policemen," she said.

"This is a tax that's just going to get bigger. We know from just from our Christmas surveying that online (shopping overseas) will grow this Christmas by 20 per cent. Domestic retailers online will also grow, but the big difference between the two of them is one has to pay the tax and the other doesn't.

"And in the end run that really is about jobs. There's a reason why the National Party at its last federal conference voted for a $20 threshold. Because they are feeling the pain in their local communities from small businesses and small retailers who are missing out.''

Mrs Osmond said the Government could not be accused of introducing a new tax.

"This is just closing a loophole in the tax law that's been handing around since nobody shopped online," she said.

The retailers agree with the findings of an inquiry in 2011 by former Victorian Premier John Brumby, former NSW Premier Nick Greiner and businessman Bruce Carter. Then-Prime Minister Julia Gillard asked them to review the goods and services tax but their findings were not adopted.

Earlier this month Mr Brumby said: "And the beauty of computer technology and the internet is that in the old days these things might have been costly to administer, but I don't believe that's the case now."

He said the application of a consumption tax on goods bought on the internet was "a complete non-issue'' in Britain, the US and Canada, and could help state finances here.