Good friend, Andy Alcock, deals with this from his Adelaide base:
Online GST exemption ‘not fair’ InDaily 5.1.2015
I felt I had to make a comment about this article which appeared on the website of Adelaide’s on-line newspaper on 5 January 2015.
The “Liberal” Party claims that it is reforming Australia’s tax system, however, all it has done is to ensure that the big mining corporations do not have to pay a wealth tax, no manufacturer will have to pay a carbon tax and ordinary people will have to foot the bill to pay for the Australian involvement in yet another US Military Industrial Complex instigated war.
It seems to me that we all need to be pushing for politicians who have responsible policies to ensure that our tax system is fair to the poorer sections of the community, to ensure that we have effective policies and procedures in place to care for our environment and those living in it and to be fairer to our poorer neighbours eg not stealing oil and gas from Timor-Leste, the poorest country in our region, cutting back on humanitarian aid and treating asylum seekers so appallingly.
New assistant treasurer Josh Frydenberg. Photo: AAP
CANBERRA | Applying the GST to online overseas sales of less than $1000 appears more likely after a key Federal Government minister criticised the existing exemption.
New assistant treasurer Josh Frydenberg says exempting overseas online retailers from the 10 per cent impost on goods and services is not fair to taxpayers, retailers and their employees.
“This is not a level playing field,” he wrote in The Australian today, adding that local retailers effectively faced a reverse tariff.
Frydenberg argues the $1000 threshold is out of step with other western countries, citing much lower levels in Canada ($C20) and the UK (STG15) and no exemption at all in the United States.
“If these nations can adopt a lower threshold, why can’t we?”
Frydenberg acknowledged the cost of compliance was relatively high, a reason used by the previous Labor government to retain the threshold.
But as online sales increased, that cost would come down, he said, noting recent data.
Between 2008/09 and 2010/11, the number of goods valued below $1000 increased by 58.2 per cent while the number of goods between $1000 and $5000 grew by only 18 per cent.
A good tax system was characterised by simplicity, efficiency and fairness, Frydenberg said.
That was why the online GST threshold would be looked at in the Government’s strategy review of the tax system.
The willingness on the part of governments, federal and state, to deal with the issue was a test case for the nation’s ability to adapt to the growing digital economy, he said.
Meanwhile, Federal Government backbencher Dan Tehan is calling for a broadening of the GST, arguing it would deliver up to $21.6 billion in extra revenue annually.
He says allowing minimal exemptions to the goods and services tax is a better option than lifting its 10 per cent rate.
The Coalition in 2015 must begin where it left off when last in government by finishing its reform of the tax system, the Liberal MP said.
While other OECD countries had applied value-added taxes more broadly, Australia had an aversion to broadening “this taboo tax”, either due to flawed arguments of unfairness or political cowardice.
“One only has to look across the ditch for inspiration,” Tehan wrote in The Australian Financial Review today.
Since its introduction in 1986, New Zealand has raised its GST twice. It also recognised from the start that the only way to reap a full GST benefit was to have minimal exemptions.
In addition to overseas online purchases of less than $1000, fresh food and health and education services are also exempt from the GST in Australia.
The NZ GST covered 96 per cent of consumption, while Australia’s only covered 47 per cent and is shrinking, down from 53 per cent a decade ago, Mr Tehan said.
He dismissed as an “intellectually lazy argument” that broadening the GST would hit the poorest in society.
“This completely ignores the fact that applying welfare through an indirect tax means that everyone gets the exemptions.”
The GST will be examined in the government’s strategic review of the tax system in 2015.
COMMENT andrew (andy) alcock
The only thing that I can agree on with Josh Frydenberg, our assistant treasurer, is that our tax system is not a level playing field. Instead of tinkering around with the GST, which is an extra impost that badly affects those less well off, Mr Frydenberg should be insisting that the super wealthy and the big corporations pay the same level of tax as ordinary Pay As You Earn (PAYE) taxpayers, introducing a wealth tax and closing the loopholes that allows Australian corporations to locate their HQs in developing countries to avoid paying their fair share of tax. The fact that the small wealthy section of the community can get away with this is, In Australian parlance, nothing but “bludging on others. Another step to make life fairer on ordinary people, would be for Australia to introduce a Robin Hood Tax. This is a small tax on the movement of large sums of money by the super wealthy and the big corporations. The good thing about it is that it is not an extra impost on people who have little. Several nations in the EEC have introduced this tax. It is a big revenue raiser and the funds go to programs to combat poverty and to restore the environment. Of course, the most of the large corporations do not like this concept because it cuts back on their profits. They also do not like laws on fair minimum wages, OHS & Welfare and Workers’ Compensation for workers, recycling and environmental care programs to protect the environment. They accuse the responsible governments that introduce such necessary laws as preventing investment. The sad reality is that the “Liberal” and National Parties really only represent the mega rich and they will not adopt fairer tax systems to make it easier for those who have little. Many of these conservative politicians claim to be adherents to the Christian philosophy, but overlook one clear plank in its teaching – take from the rich and give to the poor. They are busy taking from the poor to give to the rich. If you don’t believe me look at their behaviour over the past 12 months. Have we learned nothing from their attempts to foist WorkChoices on us? The other sad reality is that the conservative politicians in the right wing of the ALP are no better and when they leave parliament, are able to quickly find work with the big corporations. Let us elect people to parliament who will genuinely work to make life fair everywhere and not those who merely want to exploit the “have nots” and the environment on behalf of the “haves”.