Levelling the Playing Field !

It looks like some of the benefits of online shopping are about to retreat.  When this July rolls around goods under a thousand dollars will no longer come into this country free of the GST.   That has long been a gripe from our brick and mortar stores and it does leave them with at least a ten percent price disadvantage when competing with eBay and Amazon.

Now a new levy of five dollars for every parcel coming into the country is looming on the horizon.  It will be called something like " a biosecurity tax " and the aim is to recover the huge cost of security screening that applies to postal articles to check for drugs or dangerous items entering our shores.

Last year 38.7 million parcels arrived consigned to Australian households and this was a 22% increase on the previous year.  Mostly these are for low value goods and the statistical analysis boys predict that the numbers will increase by at least a further 31% over the next four years.  The sophistication of drug concealment ensures that this screening to detect drugs will sharply increase inwards mailroom costs.

A flat tax on each parcel is far simpler than levying a tax based on the value of the goods in the parcel and it would deliver about $200 million in the short term.   It is also likely to bring about a change in buying habits.  That combination of the GST and a five dollar tax on each package will deter single item buys in favour of combining a number of items in the one package.

It also vindicates the improved surveillance of bulk cargo at our ports of entry, which has been the preferred method of drug importation.  The huge number of containers entering each year made individual inspections of each impossible, but new X-ray analysis has increased speed and accuracy to the degree that detection rates have increased exponentially.

Cocaine, opiates and crack have turned drug importers to testing the mail system with lesser quantities skilfully hidden in parcels.  We have more sophisticated checking equipment installed but this does slow throughput and increase the labour content and the government wants to recover these costs.

There is also an obvious necessity to achieve balance in the marketplace.   The fact that our biggest chain store group has just announced a loss that sent their share price tumbling and raised doubts about the groups survival raises many questions.   Do international companies that do not pay tax in Australia have an unfair advantage over  Australian owned and operated businesses ?

The thousands of people who earn their living in the retail trade in Australia may see the GST and that package tax as levelling the playing field !