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Chasing the GST dollar

There is a a hoary old chest nut that is dragged out on a regular basis from our domestic retailers . Its the exemption  for online purchases of less than $1000 dollars from the GST. The retailers dream that lowering that threshold will make an improvement in their ability to compete.

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I can’t see Abbott going anywhere near this to be honest, firstly the GST is workable only because retailers are forced to act as tax collectors for the government but the Australian government does not have the jurisdiction to force overseas suppliers to do the same for them. It just can’t happen. So how would such a tax be collected? from the shippers or via Customs? The reason for the $1000 threshold is to make the administrative burden of collecting the tax commensurate with the revenue gathered. Lowering the threshold would not lower the burden per transaction so it could very easily mean that the cost to collect the tax could exceed the revenue collected which is the Labor way of doing things (see the mining tax as an example) its unworkable and the government knows this.

The simple fact is that retailing is moving more and more online simply because we the consumers like to shop that way and personally I would be more than happy to buy from Australian based online traders and I do so when ever I can because domestic online stores have one very big advantage over those based overseas and that is reduced shipping times. In my experience any item purchased  from China  will take about a month to arrive items shipped from within Australia can be on your doorstep within days if not the next day. In this age of instant gratification that short of difference in shipping times is a deal maker/breaker for most people.

So I predict that this whine about GST on online sales will amount to nothing just as similar whining in the past has done. If domestic retailers want to retain their market share then they are going to have to try to play to their strengths more, namely work on their service, their ability to instantly supply the goods to a customer and being available to attend to any warranty claim that may arise finally they have to realise that the price for their products is a big determining factor in buying decisions and they can no longer just hope that we consumers don’t notice that the product they sell can be bought cheaper elsewhere.

Cheers Comrades

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1 Comment

  1. deknarf says:

    The local retailers had it so good for so long, and then along came the clever people who adopted the internet as their retail portal — and WOW! they were successful. Both o/seas and local.
    Revise your business model oh stuffy, back in the 50’s, gosh we can mark-up as much as we want without competition, retailers! You might discover that you become profitable again! Or you maybe just fade into history! That’s capitalism for you!!

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