Supported … Mike Baird, NSW Treasurer. “If a cost-effective method for collecting the payments can be made, the low-value threshold should be reconsidered” …Victorian Treasurer, Kim Wells.
VICTORIA, South Australia and Queensland have thrown their support behind a proposal by the NSW Treasurer, Mike Baird, for the Commonwealth to consider lowering the GST threshold on online purchases of goods from overseas.
But the proposal, which could raise hundreds of millions of dollars in extra tax revenue for the states but add 10 per cent to most purchases, has received a lukewarm reception from the federal government and opposition.
Mr Baird has proposed lowering the threshold from $1000 to about $30 to bring Australia into line with other countries such as Britain and Canada.
The move, a recommendation of the Productivity Commission, would catch millions more transactions in the GST net. Mr Baird has said the extra revenue could go towards the abolition of stamp duty on housing or infrastructure and services.
The Victorian Treasurer, Kim Wells, welcomed the proposal.
”Victoria has seen a substantial reduction in GST funding at a time when the Commonwealth expects the state to deliver more services,” Mr Wells said.
”If a cost-effective method for collecting the payments can be made, the low-value threshold should be reconsidered to generate an overall benefit to Australian consumers and businesses.”
The South Australian Treasurer, Jack Snelling, was overseas but a spokesman for the acting Treasurer, Tom Koutsantonis, said the state ”has consistently welcomed measures to improve the collection of GST revenue, including through a reduction, where cost-effective, of the GST-free importation threshold.”
A spokeswoman for the Queensland Treasurer, Tim Nicholls, said as part of its submission to the federal government’s GST review panel, the state had ”supported lowering the threshold if it could be done efficiently”.
The West Australian Treasurer, Troy Buswell, was more cautious.
”There may well be merit in reducing the GST-free threshold for online goods and providing a more even playing field for Australian retailers,” he said. ”However, any decision would have to also consider the impact of increased costs on consumers and the cost and complexity associated with the collection of the GST.”
He said there was ”absolutely no link between this issue and the state’s stamp duty regime”.
Mr Baird’s proposal coincided with the release of a report by a Treasury taskforce showing that, in certain circumstances, reducing the threshold would raise more money than it would cost to collect, a complex process that could involve monitoring millions of incoming parcels.
The report found, for example, that if the $1000 threshhold were reduced to zero, collections costs would be $450 million, which would be substantially more than any extra revenue raised.
If the threshold were lifted to $500, far fewer parcels would have to be checked and collections costs would be just $11 million.
Previously, the federal government and the opposition have ruled out lowering the threshold, saying they did not want to increase prices. But revenue is being lost as online purchases increase and pressure is growing to plug the hole.
Thursday’s report says the number of parcels now entering Australia each year has more than doubled between 2006-07 and 2010-11 to more than 48 million. ”Similarly, the number of low-value goods arriving as cargo was around 10.6 million in 2010-11, an increase of more than 58 per cent since 2008-09,” it says.
The shadow treasurer, Joe Hockey, said the Coalition would study the report but had no plans to change GST policy.
The Assistant Treasurer, David Bradbury, warned any policy change would be very complex to administer because of factors outlined in the report.
”The sheer number of parcels means the potential size of border processing tasks, such as identifying goods and entering data, as well as impacts on storage and delivery, render many processes not cost-effective,” the report says.
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