Levelling Australia’s taxation inequality must be made a priority

PEAK retail industry body the Australian Retailers Association (ARA) said Australia is losing around $1 billion in GST revenue because of the Low Value Threshold (LVT) GST giving overseas business a tax advantage.

A reduction to $20 in the threshold from the current $1000 collection rate must be made a priority.

ARA Executive Director Russell Zimmerman agrees wholeheartedly with the Shopping Centre Council of Australia’s (SCCA) recent statement that the LVT actually operates as a ‘reverse tariff’ by raising the prices of local goods and lowering the prices of imported goods.

“The ARA supports SCCA’s view that this makes no economic sense - particularly when it means less money is available for hospitals, schools and other community services.

“An Ernst and Young 2013 report estimated that GST revenues could be raised if the LVT was lowered from $1000 to $20. Ernst and Young estimated that good imports alone would capture an additional $997 million of GST in 2014/15 - growing to $1.643 billion by 2020/21.

"Thousands of jobs are at risk if closing the GST loophole is not made a priority. This issue is costing jobs in the retail sector as people are buying overseas where GST is not applied. All retailers ask for is a level playing field to compete on.

“In a time when our country is in financial crisis, this would seem to be a natural righting of a tax loophole that hasn't kept up with the global digital revolution. By leaving offshore online purchases tax free, Australia is only hurting itself. We are sending profits to foreign companies, jobs to foreign workers, and tax revenue to a foreign government.

“If urgent action is not taken, a further 33,000 jobs will be lost by 2015 in the discretionary retail sector and states will forego $2.453 billion on GST revenue by 2015.

“The previous Labor government sought to justify its own inaction on the issue by arguing that the cost of collecting GST on online shopping would outweigh the additional revenue it brought in. However, this was contradicted last year by Labor's own Low Value Parcel Processing Taskforce, which found the incremental revenue generated by scrapping the tax break would more than cover the cost of collection.

“The opportunity is there for the government to restore a level playing field - the government must stop what is active discrimination against Australian retailers who are being taxed in areas their overseas counterparts are allowed to avoid.

“The current customs and parcel GST collection system should be replaced by a system that requires offshore suppliers to register for Australian GST and collect and remit the tax. This proposal has been talked through with the Federal Government for the last two years. It can be achieved through a simple lodgement of a Business Activity Statement (BAS) just as Australian businesses are required to do.

“By targeting just the large overseas online retailers to start off with, GST would be collected at little cost to government, taking away the long held argument that the tax is too expensive to collect.

“The ARA believes that over a reasonably short period of time nearly all the lost revenue from GST not being collected by overseas retailers will be brought in, thereby helping states pay for schools, police and hospitals along with helping local Australian retail businesses by putting them on a level tax playing field in both their online and traditional stores.

“The ARA will continue to work alongside the government to get this issue resolved once and for all,” Mr Zimmerman said.

Since 1903, the Australian Retailers Association (ARA) has been the peak industry body representing Australia’s $265 billion retail sector, which employs over 1.2 million people. The ARA ensures retail success by informing, protecting, advocating, educating and saving money for its 5,000 independent and national retail members throughout Australia.

Visit www.retail.org.au or call 1300 368 041

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