States and retailers fooling themselves over GST

November 7, 2012, 9:16 am Michael Pascoe Yahoo!7

Simply applying the GST to the sale of internet goods won’t be enough to plug the widening cracks in State budgets.

What do the State treasurers and many local retailers have in common? They’re both in financial trouble and they’re both deluding themselves about the impact of GST on internet shopping.

The push is on again to lower the current $1000 level at which overseas internet purchases are liable to pay the 10 per cent GST. Various hapless retailers apparently believe applying the GST to international online shopping will suddenly drive customers back into their shops. Probably not.

And various more hapless state treasurers have a crazy idea that they can escape smashing into their looming fiscal walls if they can just pick up the GST revenue presently forgone by the those traitors armed with a credit card and a mouse. Definitely not.

For a start, the reason why there is a $1000 threshold on international goods subject to GST collection is that below that level, it costs more to collect than is raised – as has been diligently explained by a thorough Productivity Commission report. Before the treasurers and retailers have a ghost of a case, they’ll need to come up with a cheaper way of collecting the tax.

More importantly from the retailers’ perspective, a 10 per cent price differential isn’t what drives people to shop on line. Even with the GST, the online alternative will remain substantially cheaper and the range and convenience factors often trump that again. E-tailers are only going to become more professional as they continue to refine their craft, leaving the dinosaur off-line shops floundering if they can’t improve their offer, experience and service, as well as contain their costs.

Meanwhile, back at the states, each treasurer knows former NSW Nick Greiner is correct is telling us we’re stupid not to even consider extending the existing GST – and he’s not talking about internet sales. Each treasurer knows they’ve eroded their existing tax base and that they’re facing inevitable expenditure increases brought on by our demographics.

The bell was rung for me during Kevin Rudd’s attempt to take over all the funding of the states’ hospitals. It was admitted in that process that, soon enough, just the hospitals would chew up the entire GST.

Our aging population and the high health insurance inflation rate mean the states are running out of cash – and that’s before building infrastructure and improving the educational offering that we need if we want to remain a high-income nation.

But the treasurers remain politicians first and responsible administrators last. Each of them knows that, whatever their political party, if they dare raise the idea of extending or increasing the GST, their opposition will hound them from office.

Their failure is more blatant in the area of stamp duty on real estate sales. They all know this is a bad tax, a tax that is iniquitous, that does economic harm and that should be replaced by a broad land tax that does not exempt the family home – but they are all too gormless to suggest the necessary reform, preferring to hang on to their own jobs rather than do what’s best for the country.

There has been just one exemption to that so far: the ACT. The territory government has faced up to the evils of stamp duty and are phasing it out, replacing it with an effective land tax. But to avoid the political backlash, the ACT government is making the change over 20 years so that any one politician won’t have to pay a political price. At least it’s a start.

Show:
Newest First
Oldest First
Top Rated
Most Replies

11 Comments

  1. Len09:46pm Sunday 23rd December 2012 ESTReport Abuse

    As far as the health department in Queensland , If one was to look at the varience of adminstration and cost of actual care given then that sheds light on where the waste is and that is in adminstration. However in Queensland when "cant do" made cuts to the medical it effected the working nurses and docters and the worth while programmes. And the adminstration costs go on . Savings need to come from the top end of departments and filter down over time

    Reply
  2. brian downes05:57pm Saturday 08th December 2012 ESTReport Abuse

    one purchase comes to mind i wanted the first year complete of an american tv series.the price here from one of the well known dvd suppliers was$51.00 igot it the following week from amazon for $23.50 plus $5.00 postage.the saving was$23.00 i will be happy to pay gst because i will only save $21.00 dollars a bit of competition here and less complaining would change the whole thing but look at my figures and justify the difference.people say to me oh yes but the australian suppliers have to pay wages and tax and rent.do they thinh that amazon dont pay these things?i recently got a disc from their german branch for half the price.and from england for 60%in spite of the exchange.gst would still leave me very happy

    Reply
  3. Saman11:42pm Wednesday 14th November 2012 ESTReport Abuse

    If the cost of collecting the GST is more than 10% that cost must be added to the goods. Business has to pay the GST and all customs handling fees at the ports. Why not everybody else who imports. There is a small pack of business who can at least 10% is charged. The items I sell are available only about 12% cheaper on line from US.

    Reply
  4. Dean01:44pm Wednesday 07th November 2012 ESTReport Abuse

    Lve shoping online and ebay is the greatest.

    Reply
  5. Russell01:13pm Wednesday 07th November 2012 ESTReport Abuse

    If Brick's and Mortar wants to get bodies back into shops they have to begin by offering something that the E-traders can't offer. Personally I'd be a lot happier to visit bricks and mortar shops if they had a play area for kids. Works a treat for our Local Bunnings. Bricks and Mortar will have to start thinking outside the box.

    Reply
  6. Lucky12:36pm Wednesday 07th November 2012 ESTReport Abuse

    The push ???? What push dear pascoe ,,, a yes, we must push labour-freen shyte over the cliff

    Reply
  7. Lucky12:34pm Wednesday 07th November 2012 ESTReport Abuse

    For a start ????? What start dear pascoe ..... Labor- green destroyed australia . No start , but end only

    Reply
  8. Lucky12:32pm Wednesday 07th November 2012 ESTReport Abuse

    responsible administrators ????? DEAR PASCOE . YES WE HAVE responsible administrators HERE .... OUR DEAR LABOUR-GREEN DICTATORSHIP ,,,,, WE ARE LUCKY AND BLESSED HERE

    Reply
  9. Lucky12:30pm Wednesday 07th November 2012 ESTReport Abuse

    treasurers have a crazy idea ???? HOW DEAR PASCOE . WE HAVE THE BEST treasurer IN THE WORLD , SWANY , HE AND CHINA WILL SAVE US , WE ARE THE BESTY IN THE WORLD ,,,,, LABOUR - GREEN SHYTE WILL SAVE US

    Reply
  10. Lucky12:25pm Wednesday 07th November 2012 ESTReport Abuse

    states are running out of cash ????? HOW DEAR PASCOE ???? ALL TIME YOU SAY .... WE ARE LUCKY , WE ARE THE BESTY IN THE WORLD , WE ARE BLESSED ???? ARE YOU WRONG THIS TIME .... HERE ALL IS PERFECT ,,, WE HAVE LABOUR-GREEN SHYTE

    Reply

Stock Quotes

e.g. BHP, CBA
COMPARE & SAVE