The government’s push to force overseas online retailers to collect GST for all goods purchased online appears to be backfiring spectacularly, with major pushback from some of the biggest online sellers.
The Treasury Laws Amendment (GST Low Value Goods) Bill 2017, introduced into Parliament in March, would impose strict new rules on all overseas retailers to apply GST to online purchases. Domestic retailers claim to be losing billions to overseas companies, but the government only expects to raise $300 million over three years from the change.
At the point where goods are sold, retailers would need to collect GST on behalf of the Australian government or face “a range of administrative penalties” and powers available to the Commissioner of Taxation. The Commissioner also has wide general anti-avoidance powers that can be exercised if entities re-organise their business practices or undertake other activities to avoid GST.
Perhaps unsurprisingly, overseas retailers, by and large, have expressed concern about the legislation. While one of the largest sellers — Amazon — has expressed support for GST on imports, the vast majority of those making submissions to the Senate inquiry on the matter are opposed.
Amazon said the proposed model would be complex and untested and said there would not be enough lead time to implement the new system, which the government proposes to bring in from July 1.
Online clothing retailer ASOS also told the Senate committee that there would not be enough time to implement the new system before July 1. ASOS also said items could be double taxed — the GST collected by the retailer, and then an import tax collected at the border. The legislation does not make it clear whether one of these would be refunded to the consumer.
Online auction site eBay has said that many of its Australian sellers collected GST already — even if those overseas do not — and the proposed legislation was “complex, inconsistent, unworkable and will harm Australian consumers in many ways”. Ebay said it would force Australian consumers onto “online marketplaces in the dark parts of the internet”.
Ebay said if the government proceeded with the legislation, it might force the company to “prevent Australians from buying from foreign sellers”.
“No tax would be paid to Australia, and none would be owed. It would raise no revenue, deny Australians access to choice and lessen price competition. The solution isn’t even a win for bricks and mortar retailers because Australians would still find ways to buy online.”
In a shock to precisely no one, the Australian Retailers Association is in favour of the legislation, issuing an ominous warning to those in Parliament who might have concerns about it.
“This reform is a long time coming. The retail sector will look very poorly on any delay caused to the implementation and those individuals causing the delay.”
Consumer group Choice said Treasury had not released any modelling showing the revenue raised would be worth the cost to collect it, and warned that some overseas retailers might simply block Australian customers.
Amazon wants Australia Post to collect the GST, rather than retailers having to do it. Australia Post said being forced to do this would cost the company an additional $900 million per year, including $560 million in additional staff and $160 million in administration costs. AusPost says some customers would abandon their goods with Australia Post rather than paying for the GST, and the cost of returning these items to sellers would cost Australia Post around $120 million per year. Without government funding for this collection, Australia Post said it would need to raise its charges.
The committee will hold its first hearing in Melbourne on Friday.
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