An Australian taxpayer advocacy group has joined forces with a coalition of international
taxpayer organizations and academics to condemn the Government's plans to abolish
the low-value goods and services tax threshold on imports.
In separate submissions to the Senate inquiry into the proposes GST changes,
the Australian Taxpayers Alliance and two economists from RMIT University in
Melbourne warn lawmakers and the Government that the proposals will drive up
prices for consumers, and could lead shoppers towards using less reputable sites
when purchasing goods and services online.
"This proposal is bad for business, bad for consumers, and bad for trade,"
said Tim Andrews, Executive Director of the Australian Taxpayers' Alliance.
"If enacted, this great new tax on everything will slug already struggling
families with an extra ten percent on books, on shoes, on clothes, on electronics
– on anything brought into Australia online."
"To make matters worse, in trying to turn online marketplaces into tax
collectors, they are asking for something that might be impossible – and
might force some of them to scale back, driving Australian shoppers to black
market websites which lack consumer protections," he added.
Legislation currently before parliament requires overseas vendors, electronic
distribution platforms, and goods forwarders with an Australian turnover of
AUD75,000 (USD56,780) or more to register for, collect, and remit GST for low-value
goods supplied to consumers in Australia. The change is due to be introduced
on July 1, 2017.
Currently, low value goods – i.e. goods with a customs value of AUD1,000
or less – are generally not subject to GST when imported directly into
Australia by the recipient.
The Government intends to review the new arrangements after two years "to
ensure they are operating as intended and to take account of any international
In comments made when the draft legislation was published in November 2016,
Australian Treasurer Scott Morrison said that the move was intended to align
the tax treatment of imports and locally provided goods and services. "The
intention is that low value goods imported by consumers in Australia will face
equivalent GST treatment to goods that are sourced domestically."
However, in their submission to the Senate inquiry, economists Sinclair Davidson
and Chris Berg said that the elimination of the low-value threshold would effectively
constitute a new tax on inbound internet trade – "that is, it will function
as a tariff imposed on Australian consumers."
They also contend that the measure will be expensive and complicated to administer,
but raise relatively small sums in tax revenue.
"The tax is inconsistent with the government's commitment to deregulation,
the promotion of international trade, and its innovation agenda," they
"While masqueraded as a tax integrity measure, this tax is clearly intended
to operate as a form of protectionism," they added.
A group of 16 taxpayer organizations from around the world have also criticized
the GST amendments in a recently published open letter. Describing the measure
as "a thinly veiled attempt to tax the Internet," the coalition, said
that the legislation "will seriously damage Australia's international standing
and the Australian economy."
They also raised the possibility that other countries may retaliate against
the GST changes by introducing similar laws of their own.
"Imposing GST on all imported goods will be damaging to many Australian
businesses exporting to other countries and damage trade relations between Australia
and other nations," the organizations wrote. "Complaints of the unfairness
of international competition will only create a political environment in these
other nations that will pressure them to respond in kind."
The group is also concerned about the ability of online marketplace providers
to enforce the changes.
"For large providers like eBay, Alibaba, ETSY, and Amazon Marketplace,
which each deal with millions of sales internationally per day, and do not hold
the goods in question, collecting GST is not feasible and there is significant
evidence that they shall not be able to meet the compliance burdens by July
1," the letter said.
The letter was signed by representatives from Americans for Tax Reform, the
Canadian Taxpayers' Federation, the New Zealand Taxpayers Union, the Spanish
Taxpayers Union, and the United Kingdom Taxpayers' Alliance, among others.