Treasury flying blind on online shopping tax

The smarter one's will sell digital products so the customer can download immediately. Win/Win, with no delivery and logistic costs at all.

 

It's not that big of an impact for things that cost a bit.
But it's going to make a bigger difference the cheaper the item is.
Video games, CDs, DVDs, books, software: We already get reamed on the cost of these in Australia.
An example: I just bought a replacement port cover for my phone. Can't get it in Australia. It was about $14 delivered. IF the processing fee was $16 for example, that would make the total about $31. That's not cool.

 

Very true ... I was more answering with the "cost of postage" from places like China compared to posting overseas from Australia.

I've had to close businesses down in the past because most of my customers were overseas and the cost to post was prohibitive

 

I agree, that part is annoying. I order a small plastic part from China - $1.99 delivered.
Order a small plastic part for a washing machine from Australia - $16.50 delivery.

 

This announcement by the govt. has had no industry consultation. They are simply looking to divert attention from the problem they are currently having. Notice it doesn't start until July 2017? There are numerous reports that state that the cost of collection will be greater then the amount collected! Furthermore we simply don't have the infrastructure to keep the volume of items that would be held pending GST collection.

With regards to mail cost, it's simply a matter of volume. The items arrive via regular airfreight cargo. The unit cost is in the cents as you can cram in hundred of small parcels into an aircraft unit/container. Once it arrives it's re mailed via the post. Again when you have thousands of item Aust post gives you a good rate!

 

How does the UK do it? And Canada and New Zealand?

 

It's outlined in the news story linked in the original post.

 

In responding to the claim "numerous reports that state that the cost of collection will be greater then the amount collected", I was interested in how the UK implement the scheme and whether it costs more to collect the VAT than the amount collected. Unfortunately, this is not mentioned in the article.

 

To mangle a line from How I Met Your Mother, "...looking for a travel agent reading a newspaper in a library, those thing don't exist any more Ted!"

With every revolution there are winners and losers. Loss of a job in one industry opens opportunities in another. I'm into bicycles, and you see this whinging a lot from bike shops. The bike shops that will survive are the ones that change their model more towards a service centre. I know of bike shops that scoff at people that walk in with something they have bought from the internet, and I know of bike shops with a web browser on the shop floor. Which one do you think is going to survive?

I also know some people in high places in the retail industry, and I understand their comments about "level playing field", but as has been mentioned, if the difference in price was 10%, I'd buy local every time, but it is not.

If the argument is about missed opportunities for collecting tax, they'd be better off getting rid of middle class and corporate welfare, and tightening tax avoidance rules.

Inertia.

 

Anyway, more absurd claims in the paper today:

http://www.abc.net.au/news/2015-08-24/berg-forcing-gst-on-imports-doesnt-stack-up/6719706

Do you think the writer understands that GST is paid by the consumer?

 

That's hilarous! I print out part lists from wiggle or ribble, take them to my bike shop and ask the owner which ones are best for my bike... and then pay them to fit them.

It's a great business model for the bike shop.

 

Using their example of how ours would work if it was similar to the current UK system:

 

Exactly. Of course, it will be necessary to change the expectations of the customer. Do you ever go to a car mechanic and say "I expect you to change my brake pads for free"?

What this really means is that instead of just buying small bits and pieces online, I'm going to pad out and order to make it worthwhile, and buy some big ticket items as everything will incur a fee!

Inertia.

 

I completely disagree. Why subsidise waning industries and jobs when instead you can encourage new growth?

The whinging is not valid. Adding GST will do nothing except **** off everyone. Everything is moving to the internet, get on board or go out of business.

 

In short I don't know. Below is from a study comissioned in 2012.


http://www.treasury.gov.au/~/media/...lue Parcel Processing/Downloads/PDF/LVPP.ashx

Page 9 has some info that states the cost of collection, at $0 threshhold which the govt wants, is higher than the revenue raised.

So it may sound good in theory, but why would you bother?

 

This wave-off response always raises it's head in this discussion, and it's possibly true....but "when" in another industry?

It doesn't help anyone in the short term - which is now. At the end of this year there will a few thousand more Year 12 kids hitting the streets. And the next year, and the next year.

I'm not saying that many businesses will close down. Some will for sure, but what I'm saying is that a very large volume of retail businesses will still trade - but with less, and less staff as time goes on.

Many folks trot out this line. It is made to sound like folks are out there cheating the Gubb and everyone else.

But, tax avoidance rules are perfectly legal and put in place by the Gubbmint, and encouraged as they give incentive to those who receive the avoidance rules for various reasons; mostly to encourage investment, business growth (job growth) etc..

For folks who are avoiding paying more tax by using the rules, they are merely playing the game as per the rules of the game.

The Gubb can change the rules on this matter, but my guess is that the ramification will be a contraction of business activity to a degree; maybe more job losses if the taxes increase (or incentives decrease) and costs get too high.

What exactly is "Corporate Welfare"?

 

How do you see this occurring? This is a serious question too.

If you were the Feb Gubb, what would you do to encourage growth?

My guess is the Gubb are already aware of the trends, and know that their revenue streams (from retail) are steadily declining. How far will it go? Noone knows.

But, if their current revenue streams (local retail) are declining, but retail is still staying at the same levels, or possibly higher, then you just know that they will take steps to tap into it.

My industry (tyres) is a good example of what they are missing; tyres. It is easy for anyone to order 4 tyres from O/S and have them sent out minus GST.

The cost of getting them fitted (by me) is covered by the GST saving for the most part. The Gubb still gets a little bit of GST from my part of the transacation, but not as much.

The loss of revenue on those sales up to just under $1000 would cover an enormous amount of purchases - Ipads, washing machines, computers, clothes, tv's, sets of golf clubs, and so on.

 

That's interesting. On page 11, it makes it clear that:

It's interesting they have made conclusions that the cost of processing will be more than the revenue raised without any attempt to estimate the amount of the handling charge. Surely that number is relevant in any examination of the costs vs revenue raised of such a scheme?

 

I believe the cost benefit analysis was based on govt department, ie, customs and ATO. As advised earlier there has been do discussion with industry prior to the announcement on Friday. This is why I suspect it's simple a thought bubble to divert attention from other issues. Received the below this morning.
· details relating to the new GST collection process proposed for low value consignments
- non-residents (overseas suppliers) will be the ones who will be required to charge, collect and remit the GST for digital and physical products.
- as is the case in Australia, only vendors with an Australian turnover of $75,000 will need to register and charge the GST.
- the Commonwealth will draft legislation for the application of the new arrangements from 1 July 2017

How is the govt supposed to assertain what turnover an overseas business has? How many business will claim they don't turn over this much and claim an exemption?

 

If it is a publically listed company, presumably it would have to do some kind of annual reporting. That said, it is unlikely the ATO is going start trawling through the annual reports of companies to see if they meet and annual turnover requirements. Then what if the company is not publically listed? Looks like it will be 'opt in' and the govt is hoping for the best? In any case, the ATO can't really compel and overseas company to register for GST as it has no jurisidiction overseas. It will certainly be interesting to watch how this plays out.