Online shopping tax could add 250% extra to internet purchases

Just when we were really enjoying online shopping, the Government wants to penalise us for it.

Most people know that buying goods online can be cheaper than going into a shop, especially if that online store is based overseas. But now, online shoppers could be slapped with a 250 per cent tax price hike when they buy bargains online if the push to lower the GST threshold is granted.

Currently, any goods bought overseas under $1000 don’t attract GST, but this could change if these rules are abolished.

Consumer advocacy group Choice has found a $20.30 book from an overseas-based online store could be marked up by 256 per cent to $72.34 and a $24 dress marked up by 223 per cent to $77.60.

“We’ve found that collection and processing fees could add costs of up to 256 per cent for purchases under $100,” Choice’s Matt Levey told Fairfax.

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“That’s using estimates from the Productivity Commission, who in 2011 said average collection costs as low as $50 a parcel were based on ‘highly favourable assumptions’.”

Local retailers are blaming overseas online stores for slow sales in store here in Australia and are leading the fight to drop that threshold to around $20, meaning that nice dress you wanted for $25 could be $70 or more once you checkout.

Mr Levey said talk from retailers about a “modern” approach to an internet tax which “deferred costs from government” was code for “make consumers pay”. Do you agree?

“Shifting the costs does not make the costs disappear. It does not benefit the Australian community. It just reduces competition and hits household budgets,” he said.

“Pretending they are doing this to avoid a 10 per cent tax is ridiculous, although if it becomes a 256 per cent increase then it will clearly put people off”.

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Treasurer Joe Hockey’s 2015 budget promise to “level the playing field for Australian businesses by mandating that foreign businesses supplying digital products and services are subject to the GST” seems to be coming to fruition if the new legislation is passed.

So what does Choice believe should be do? They want the government to make Australia Post more efficient for online shoppers and only change the GST threshold if consumers aren’t worse off.


We want to know – how often do you buy online? Is the price more important or the convenience?