GST on Online Purchases

· Government policy, Retail
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I keep hearing retailers want GST paid on overseas online purchases under $1,000 to create a level playing field.  I am confused.

Say you can buy something from your local retailer for $100 plus $10 GST ($110).  The retailers are saying they are disadvantaged if you buy it for $100 online with no GST.  That makes sense on the surface.  They say everyone should pay $10 GST when it arrives so they can be competitive.

This is the bit nobody seems able to explain.  The government has worked out it costs more than the revenue received through GST, to collect GST for online purchases under $1,000.  To take an example, to collect the GST on your $100 purchase ($10) might cost $15 in processing and administration.  Who pays the government’s cost of collection?  You as a taxpayer, that’s who.

So the retailer thinks you should buy an item online for $100, pay GST when it arrives of $10, then pay the government through your tax, $15 to collect your GST.  So far you are up to $125.  You then need to pay freight which might be another $10.  So you pay $135 to be on a level playing field with Australian retailers who charge you $110?

Somewhere there may be someone who can explain how charging you a tax, then increasing your personal tax to collect the tax, will make a level playing field.  It is not even revenue neutral.

Incidentally isn’t it the retailers who keep banging on about improving productivity?  How is this productive?