A Level Playing Field !

As things stand, an Australian shopkeeper is at a huge disadvantage when offering goods for sale to the Australian public.  By law, they are obliged to add the ten percent Goods and Services tax  ( GST ) to everything except exempt items such as food.  An overseas Internet company can offer exactly that same item - without the need to charge the GST.

This problem arose because when the GST was first introduced to Australia, Internet shopping was in it's infancy and putting an exemption from the tax under a thousand dollars level was not considered worth the hassle of implementing the bureaucracy necessary to actually collect that tax.  Since then, Internet shopping is seriously challenging bricks and mortar stores for market share - and we no longer have a level playing field.

It stands to reason that if a customer wishes to buy an expensive item which will attract a ten percent tax surcharge if purchased from a local store, but can be obtained tax free by clicking onto the website of an overseas supplier - the obvious buying decision does not favour the Australian supplier. Other countries protect their home market by imposing taxes such as the GST at far lower levels.   In Canada it kicks in at $(A) 19,   the UK  $(A) 28 and the USA $(A) 187.

It seems likely that we will see a law change to implement the GST on all overseas purchases from a level as low as $20.   The problem may be forcing trading giants such as Amazon and E-Bay to comply with what is an internal Australian tax law.   It is likely that we will be accused of using this as a "protectionism "measure to shield our home market.

The fact that such tax arrangements are in place in other countries should ease the way for implementation, but in the absence of cooperation it would be possible to implement the GST at the point of entry, thus making the GST payable before the goods would be cleared by customs.  Such a delay on speedy delivery would probably force overseas suppliers into compliance.

Our retailers have long been complaining of unfair competition and the need for a level playing field and it is important that this be implemented fairly quickly.    The writing is on the wall that the GST will face pressure to be increased as it is really a state tax and there is a pressing need for more state revenue to fund services.   It is quite possible that the GST may be raised to 15% - or even 18% - in the near future.

If that level of imbalance was allowed between imported goods and local sales it would simply decimate Australian suppliers.  No doubt Australian shoppers will be sad to see the end of what was really "duty free "purchasing without the need to take an overseas trip to enjoy that privilege.  It is quite possible that in bringing in changes to the level of GST tax, the old custom of buying duty free for overseas travellers may become a casualty.   Today, travel has become so accessible to the masses that "duty free " has lost it's mystique !

We live in an ever changing world and what worked in the past in levying tax may not fit in with lifestyle changes and future earnings convulsions.  It needs constant revision to keep pace with that change and what might have seemed radical in the past may now be necessary to fairly share the load
across varying income levels.   There is a tendency now to tax when we spend our money - rather than tap into the income stream at the pay office level.

The one thing that is certain is that some sort of tax will be with us forever.  It is a necessary evil because it pays for the services without which our civilization would collapse.   The task for the Treasurer in selling tax is to present a system that the majority of people accept as being fair.

Clearly, the impost between local and Internet purchases does not meet that qualification !