Coalition urged to end GST loophole

Retailers have stepped up their call for the removal of the $1000 GST-free threshold for imports, after new figures showed Australians spent more than $7 billion shopping on overseas online stores during the 2012-13 financial year.

Retailers have stepped up their call for the removal of the $1000 GST-free threshold for imports, after new figures showed Australians spent more than $7 billion shopping on overseas online stores during the 2012-13 financial year.

The Bureau of Statistics figures - released as part of Australia's trade balance data for August - showed the total value of low-value threshold imports from overseas retailers totalled $7.61 billion, helping to push the trade deficit further into the red.

About 88 per cent to 95 per cent of the spending was estimated to be for consumer goods, the bureau added.

"It tells us that the consumer has been spending more than we thought, but all that spending has been leaking to the rest of the world," JP Morgan economist Ben Jarman said, describing the new figures as helping to fill a "black hole" in data collection on online shopping.

The new figures were larger than projected, Australian Retailers Association executive director Russell Zimmerman said.

"The concern isn't that people are spending money online - either locally or overseas. The concern is that it's not a level playing field," Mr Zimmerman said.

"We believe that online [shopping] generally will grow, and as that figure grows, there will be a bigger loss of income to the states and territories if they don't do something about the low-value threshold."

Australian retailers have struggled with subdued retail spending and consumer confidence in recent years, with some of the industry's leaders blaming tough trading conditions and online shopping for their weak results.

However, Barclays' chief economist Kieran Davies said while offshore online buying had grown by 15 per cent over the past year, such purchases made up only 3 per cent of domestic retail sales. Total retail sales are estimated to be about $260 billion.

"Adding this to domestic retail sales does not change the picture of sluggish spending on retail goods in recent years as it only lifts annual growth from 2 per cent to 2.3 per cent," Mr Davies said.

"Consequently, clamping down on foreign competition is unlikely to be the panacea imagined by domestic retailers."

Australians have been spending more on overseas internet purchases, citing lower prices, greater range of goods and services available, the strength of the Australian dollar and the speed of delivery as some of the central reasons.

Harvey Norman chief executive Gerry Harvey said the new calculations gave credence to his warnings several years ago that internet shopping was changing the retail environment, especially for fashion outlets and smaller businesses.

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