Treasurers are set to approve subjecting all imported parcels to the GST.
- Tax summit: Victoria and NSW at loggerheads
- Joe Hockey: Genuine reform needed to pave the way to lower taxes
State and Commonwealth treasurers meeting in Canberra are set to agree on a zero tax threshold for online purchases, a move that would subject all imported parcels to goods and services tax.
At present online imports of books, discs and electronic equipment are only subjected to GST if the value of the parcel exceeds $1000. Online purchases from Australian retailers face GST whatever the value of the parcel.
It is believed the state treasurers are sympathetic to removing the threshold altogether rather than cutting it to a few hundred dollars as has been considered in previous meetings.
Canada has a tax-free threshold of $20, the United Kingdom 15 pounds, and the United States a zero threshold, subjecting all parcels to tax.
Federal Treasurer Joe Hockey told ABC radio on Friday that the tax would be collected directly from the overseas retailers where possible and that other tax administrations already had such systems.
The treasurers will also rubber stamp a budget decision to impose GST on digital imports of music, movies, ebooks and software from July 2016.
Championed by Assistant Treasurer Josh Frydenberg, the measure will leave parcels tax-advantaged over digital imports unless the law on parcels is also changed.
The consumer group CHOICE opposes the move saying it will lead to a new “parcel pick-up tax” where buyers order online from small overseas retailers that don’t have tax collection arrangements
“No other country has been able to compel international companies to pay a sales tax without implementing a parcel pick-up tax that punishes consumers,” CHOICE director of campaigns Matt Levey said.
“Under the same approach as the UK system, a $20 book purchased online from an unregistered business could end up costing an extra $2 in GST.
“We implore the state and territory treasurers – don’t cut Australians off from competitive online markets. The last thing Australia needs is a poorly designed new tax that won’t raise net funds, but will hit households.”
Mr Frydenberg and Mr Hockey have sold the tax as an equity measure, subjecting overseas online retailers to the same requirements as Australian retailers.
The treasurers will also discuss a proposal from the Labor states to remove the GST from tampons and sanitary pads.
A leaked letter from Mr Hockey to his state and territory counterparts costs the removal of the tax at $120 million over four years.
Mr Hockey told the ABC’s Q&A program in May he was in favour of the change but the final decision would be up to state treasurers.
The first half of Friday’s tax summit will discuss long-term reform. NSW is proposing an increase in the GST from 10 per cent to 15 per cent. Victoria is proposing an increase in the Medicare levy from 2 per cent to as much as 5 per cent.
Each say the increases are needed to make up for an $80 billion shortfall in projected Commonwealth grants to the states for schools and hospitals over the next 10 years.
Read More: http://www.smh.com.au/federal-politics/political-news/treasurers-tax-summit-set-to-impose-gst-on-all-online-imports-20150820-gj4c21.html