Tax Mutiny !

On July first the ten percent Goods and Services tax became payable on online sales of all items of any value and not just on purchases that had a value in excess of a thousand dollars.  Our bricks and mortar shops have long complained that freedom from the GST has seriously disadvantaged them by giving online traders a significant price advantage.

The two big American online trading houses - Amazon and eBay - have reluctantly applied the tax but the situation is unclear with many of the smaller traders dealing on the Australian market. In most cases their literature mentions the tax but the price of the goods remains unchanged, leaving the tax status in doubt.  There is no mechanism in our tax system to allow the customer receiving the goods to independently pay the Goods and Services tax.

It seems that the Australian tax office now has the task of implementing a means of gathering those GST payments from the plethora of individual companies trading to Australian customers.  That will not be a problem with the bigger outfits like Marks and Spencer and ASOS because they can be hit with a seventy-five percent legal penalty for not applying the GST, but that would not be a practical approach to the sole traders who are tiny and control a big slice of the online trade.

It is estimated that applying the GST to all online trades would gather at least $500 million a year to the tax office.  The problem is that putting together a tax net to catch goods coming into the country with the GST unpaid could easily exceed that sum and would be a bureaucratic nightmare.

One of the attractions of online shopping is the ease of doing business.   You select the goods and pay for them with a credit card, and they are delivered to your door by either the post office or a specialist home delivery firm.  All such deliveries pass through our customs barrier where they may be checked to ensure they do not contain narcotics.

That seems to deliver the logical control point to ensure that the GST has been paid.  Firms that have a tax arrangement in place with Australia and charge the GST and remit that tax to the Australian tax office should be permitted to affix a clearance stamp to their goods which allows deliveries unhindered passaged to the end customer.

Goods that lacked that clearance stamp would need the value stamped on the package - and the GST would need to be paid before delivery.  Either the customer would need to collect it - and pay the tax - at the post office, or this would become a task of the delivery firm.  Obviously, that would attract a handling fee in addition to the GST to be paid.

The onus is then placed on the firm offering the goods to ensure that the tax has been paid to allow fast delivery directly to the end customer.  Goods that have not been tax cleared suffer a delivery delay and the tax collected before proceeding, and probably an extra handling charge for that service - and that is a very good reason for the supplier to arrange compliance if they hope to remain in business.

What we are seeing at present is a tax mutiny by small traders.  They feel remote from the Australian tax office and many will simply ignore that tax.  Stopping delivery at the customs barrier is the obvious answer.