Tuesday, November 16, 2010

Claims of $600 million in lost GST revenue are false.

ARA Calls for Tax Reform
Peak retail industry body the Australian Retailers Association (ARA) said the Government could be losing up to $600 million in revenue by allowing goods under $1000 to be imported into Australia GST free.


The ARA claims of the government missing out on $600 million in lost GST revenue are completely false. They use simple math to come to this figure, saying that the size of goods purchased online in Australia was 12 Billion with over half going off shore. No retailer in Australia passes on 100% of the GST they collect. They only pay on the profit component of the transaction after applying GST Credits. There is also no mention on the cost of collection and enforcement. Why should we believe an association that transmits a false and misleading press release?

Free trade
The ARA wants to prevent free trade and promote protectionism of Australian retailers via taxation. Wake up. If you want Australian retailers to be competitive then encourage them to go online and compete globally.

Heads in the sand
I have witnessed the ARA over the last eight or so years pumping out press releases warning consumers about the dangers of buying online as a mechanism of trying to stem the flow of online sales - instead of actively pushing members to embrace the space.

Tax Reform
There are some opportunities for tax reform that does not involve lifting the $1000 tax-free threshold and taxing Australian consumers. If the government is looking to increase revenues then it needs to look at GST on the fees of giants like Google. Currently Australian companies advertising on Google do not pay GST. If you want a serious debate about online tax reform then that is where the debate should start.

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