No more GST-free shopping for Aussies: but it is the wrong fight? 148



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It looks like Gerry Harvey has won the fight he picked over two years ago to have the GST imposed on goods purchased online up to the value of $1000. State and federal leaders agreed in principle yesterday that the GST should be expanded to include “goods valued at $1000 purchased online” which it has previously not covered, to the chagrin of Mr Harvey who has spoken regularly of the disadvantage he felt placed in against online competition in the smaller electronics marketplace.

The owner of Harvey Norman retail chain has become the face of the battle that consumers didn’t necessarily want him to win, knowing the opportunity to buy items under the threshold online for a bargain 10% less will likely disappear. But Chief Executive Ian Moir of Woolworths Holdings, the company that has bought out David Jones says Australia is looking at it all wrong if he thinks the tax will fix their problems and they should be focused on the customer instead.

“The introduction of any sales tax in any direction only has an impact in the short term and evens itself out over time,” Mr Moir said.

“The reality is it set businesses and retailers in Australia back because they spent more time arguing about that … than they did thinking ‘how can I get ahead of the curve, what do I need to do, how can I make sure I’m giving the customer what they’re looking for’?”

The issue of removing the $1000 threshold for online goods and services was canvassed initially back in November of 2014, and then again in the government’s whitepaper on tax reform in March. Harvey and other Australian retailers with large quantities of fixed assets (from which they control their businesses) complain that foreign retailers are enjoying an advantage with the existence of this tax loophole.

Mr Moir spoke at an Australia-Israel Chamber of Commerce event in Sydney, saying retailers have to change, not force the tax system to.

“There has to be a reason to go to that store: that it be entertaining, that it’s engaging as theatre, that you like spending your time there,” Mr Moir said on Wednesday.

“You will see stores of the future be much more interactive, much more engaging and you have to spend money on that.

“There will be fewer (stores) and there will be fewer retailers”.

This fight has been around for a while now, over 5 years in fact, as the internet has caused more and more pain to our retailers on the ground. A 2011 Productivity Commission inquiry [pdf] right back in 2011 recommended against lowering the threshold despite finding strong grounds for it to be reduced significantly, saying that lowering the threshold to $20 would cost more than $2 billion to businesses, consumers and government while only generating revenue of around $550 million annually. It recommended keeping the $1000 threshold as is until it was cost effective to lower it.

But the window of opportunity around the tax appears to be to slip it in alongside the changes they are making to put a stop to Netflix and other foreign operators selling goods and services from outside Australia or the “Netflix tax” which is expected to reap the government $350 million over four years. The changes from this tax are being widely discussed to include  music and movie downloads, software and some online education courses.

Fact is, until the changes are locked in, Australians are enjoying a small window of opportunity to access some smaller products at the prices the rest of the world are paying… and soon we wont be able to. Or at least that is how I look at it.

Are you pleased to see the governments united to close the hole the retailers have been begging them to, or are you disappointed you might not be able to hunt out 10% lower priced products in the future?


Rebecca Wilson

Rebecca Wilson is the founder and publisher of Starts at Sixty. The daughter of two baby boomers, she has built the online community for over 60s by listening carefully to the issues and seeking out answers, insights and information for over 60s throughout Australia. Rebecca is an experienced marketer, a trained journalist and has a degree in politics. A mother of 3, she passionately facilitates and leads our over 60s community, bringing the community opinions, needs and interests to the fore and making Starts at Sixty a fun place to be.

  1. I doubt retailers will gain from this, I can’t speak for everyone but many of my small purchases online are spur of the moment. I would certainly not be bothered going to our large shopping centres and trudging around trying to find my purchases . I simply won’t buy. This another added cost this Abbott Government has inflicted on us

  2. Bishop wants more trips to the opera and helicopter flights, and they are going to make sure we pay for them

  3. I’m still trying to work out how anyone will be better off when this decision will cost so much more to regulate than the money it brings in. Can’t see it benefitting retailers because so much of what is bought online is so much cheaper than what is available or simply isn’t available any other way.

    4 REPLY
    • I was just sitting thinking about your post and your right, the doctor told me to buy a pill cutter, so I asked my chemist, he doesn’t have them,, I am sure places like Kmart and Woolies won’t have them either, so my only option is to buy online.

    • Local retailers will be better off as overseas ones will simply stop selling into the Australian market rather than have the Aussie taxman nosing into their business. It is all about eliminating competition not to benefit the consumer at all.

    • you cannot buy everything in a shop you want and also many people are unable to go in personally & buying online is their only option. Will not help all businesses at all. Just a money grub.
      Maybe the bricks and mortar businesses need to clean up their act and change how they do business. Make sure if they have a website easy to find what you want. Ensure it does not cost an arm & a leg to post

  4. I have to drive an hour to a town that may not have what i want, i think this is just a money maker. I will still buy online but i will resent the tax.

    1 REPLY
    • This is not about stopping people from buying online because anything bought online from an Australian website already has GST included. this new measure is aimed at overseas online shopping which currently doesn’t have GST included. Everyone who imports anything from overseas has to pay GST except these online websites so it is just creating a level playing field for ALL online shopping.

  5. This wll cost people in rural and outback and regional Australia who have no access to shopping complex’s, it is just another way for this Government to cost us more.

    1 REPLY
  6. As a size 22, I find buying clothes that are well priced and with a variety is almost impossible in the shops. Most of my clothes have been bought on-line. I rarely have problems and save a lot of money

  7. I saw a survey a while ago that listed Harvey Norman in the top five businesses for customer dissatisfaction. Instead of blaming everything else why doesn’t Gerry Harvey fix his business first. The only thing I regularly brought online were DVDs and not because they are cheaper, but for the convenience. If it’s not a big ticket new release it can be extremely difficult to find the title you want in a store with much just tossed into price based boxes. Most of my online purchases are online content, books, video etc. I still won’t buy from Harvey Norman I dislike the pushiness of their sales staff, I might check out their displays but after working out what I want, as it often won’t be displayed locally in our regional area, I order it from a local business.

    11 REPLY
    • Their staff are pushed to sell extra warranty and highly over priced leads. They have a quota they MUST reach.

    • I think Harvey just rents floor space. He is just a landlord. I bet he charges top rents . So he could care less about his profile.

    • Mkke here-went to use Harveys interest free fir 5 years system once, keep the money in the bank & pay the fridge off at the end of the five years. Turns out tgat with establishment fees & account keeping fees, it would have burned up all the interest earned in the 5 years. Then asked for a cash discount, a $1390 refrigerator was worth to me a $13 cash discount. Got the same fridge at Goodguys, $150 cheaper & a $70 cash discount on top of that.

    • we wanted to buy a Airconditioner The people at Harvey Norman couldn’t care less so we went to Good Guys in Wagga Wagga and they couldn’t have been more helpful. Also got Discount even though it was already cheaper then at Harvey Normans. Haven’t been back there in years. And will not go back either. And I am telling everybody who asks me where to shop certain things to go to the Good Guys

    • True, but, don’t go for the hard sell & question the “extended” warranty. Might not be worth the paper it’s written on, unless they have a reputable electrical mechanic servicing their goods; or are prepared to replace the faulty one!

    • Personally not a fan of “on-line shopping”! Prefer going to a nearby shopping centre & see,feel,try,hear, & read the products’ manufacturing labels, as well as having the choice to return such products if found faulty.

    • We tend to buy locally when we can as it keeps business in the district, but there is never much range on display, I find though if I go to a local business and tell them what I want, what price I saw it at they will adjust their price, often it won’t be as cheap, but the warranty will be honoured locally. We’ve had a few of problems with items taking ages to be fixed as in the case of kitchen units, they need someone to look next time they are in the area; the dishwasher nobody stocks that brand within 100km; and our gutters and roof as the flashing gave way in a series of storms as we headed overseas, they’ll get to it.

    • Yes Harveys staff can be pushy. I’ve gone to shop there and left on a couple of occasions too because of it. Some goods are displayed but the stock is not available and you can’t very often buy off the floor.

    • For me its got nothing to do with Harvey or other retailers. The theory of it is sound. No mstter what you buy, or from where it comes, you pay GST (except exemptions like food etc). So why would we not pay GST for on line stuff? The practical issue is that I’ve read it will cost more to collect the tax than the tax raises. That makes it sound a but silly to me.

  8. I absolutely. LOATHE shopping, so painless online stuff suits me
    AND…… Retail assistants need much better training. Most that I see are rude and disinterested and have no idea what is meant by customer service

  9. Gerry Harvey and the like are just greedy and cant stand us consumers getting a better deal on line.

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