Online shopping is a practice will continue to increase. It provides a level of convenience that most people appreciate. It also allows people to shop for products and services from anywhere in the world as easily as they can from businesses in their own neighborhoods. But goods purchased from foreign countries are, naturally, treated differently from goods purchased domestically.
In September 2012, New South Wales treasurer Mike Baird proposed lowering the GST-free threshold from $1,000 to $30, in the hope of “capturing more transactions in the GST net,” according to an article in the Sydney Morning Herald online.
An informal survey on the Sydney Morning Herald website indicated that many Australians are against any kind of tax being levied against goods purchased online from foreign countries. The Productivity Commission recommended the threshold reduction in a report it issued in 2011. If approved, it would increase the cost of most international purchases made online by 10%. Purchases under $30 would be exempt from the GST.
According to the Productivity Commission’s report, international purchases accounted for about 2% or $4.2 billion of retail sales, and more than three-fourths of those sales were under $100.
There is some speculation that the increased revenue earned from lowering the GST threshold could lead to doing away with a stamp duty on housing and other taxes.
“Mr Baird and the South Australian Treasurer, Jack Snelling, were asked by the federal Treasurer, Wayne Swan, to devise a plan and timetable for the abolition of state taxes such as stamp duty by the end of the year. Mr Swan has ruled out increasing the GST as a means of replacing lost revenue to the states,” according to the Sydney Morning Herald.
If the Sydney Morning Herald’s informal survey is anything to go by, Australians are not all onboard with the idea of adding an additional tax to items they purchase online. If lowering of the GST threshold from $1,000 to $30 goes through, could it possibly cause people to reduce the amount of items they purchase online from international retailers?