Lowering of GST threshold

The government of Australia is considering a demand for imposing a 10% consumption tax on online purchase of goods, below $1000.

Consumer protection vs. financial compulsions

The traditional retailers have been asking the Government to provide a level playing field as far as the GST threshold pertaining to goods purchased online is concerned. Currently, goods purchased online, whose value is below the existing $1000 will not attract a 10 percent consumption tax. It appears that the nation’s treasurers will decide on this long pending demand during their meeting next Wednesday. However, many consumer advocates are viewing this as an additional tax burden that is not necessary. However, several states consider the current higher GST threshold as a source of revenue loss.

Potential fallout

It is widely expected that a decision favoring the Australian retailers will be taken at the impending meeting of the Treasurers. However, certain issues would need to be considered before making changes to the existing GST rules. The main concern of the consumer groups is that the lowering of threshold for items purchased online down to a value such as $20 would push up the end cost for the buyer by as much as 75 percent or even more if shipping costs are included. Then there is also the issue of collecting tax from foreign companies if the item was shipped from overseas. If the same item is purchased from a retailer in Australia, GST has to be paid currently, but the end cost for the buyer won’t be as high. So, the treasurers have to ensure that their decision, whatever it is going to be, doesn’t impact the consumer that is you and me, adversely.

Source: http://au.finance.yahoo.com/news/gst-change-leave-consumers-worse-062202768.html

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