RETAIL heavyweights have attacked a government inquiry into the industry as a further sign of inaction, saying GST and duty loopholes favouring overseas retailers are "lunacy".
The retail billionaires Solomon Lew and Gerry Harvey yesterday revealed they are considering mounting a campaign against the government over what they claim is an uneven playing field. Under existing tax arrangements, overseas retailers are able to offer purchases under $1000 online without attaching GST.
The Prime Minister, Julia Gillard, has ordered the Productivity Commission to conduct an inquiry into the impact of globalisation on the retail industry, including the growth of online shopping. It is due to report back next year. The commission will also assess whether sales taxes and customs duty concessions on imports are being exploited.
Mr Lew said he was "baffled" that the government was prepared to offer overseas retailers a better deal.
"I am extremely disappointed that instead of taking decisive policy action, the government has referred this issue to the Productivity Commission," he said. "The fact that offshore online retailers aren't required to levy duty or GST creates an enormous competitive advantage for foreign businesses selling into Australia. These businesses don't pay our taxes, employ our people or contribute to our economy.
"Retailers have already been lobbying the government on this issue for over nine months. By the time the government finally completes its nine-month review, that's 18 months' government inaction."
Mr Harvey said an alliance of retailers, including Westfield Group and Myer, had been established to put the case for the sector. He told Bloomberg that any policy changes recommended by the review would come too late for many businesses.
"You've got every second person in the country importing things from overseas, evading duty, not paying sales tax," he said. "You've got an awful lot of retailers that are going to be going broke after Christmas."
Mr Harvey said Harvey Norman was considering setting up websites overseas. "The problem is, we'll spend the money putting it all together and by the time we've done it, the government will close us down."
The Treasurer, Wayne Swan, said the government was determined to ensure consumers and small businesses "are getting a fair go".
Letters News, Page 8
Frequently Asked Questions about this Article…
What is the GST loophole affecting online shopping from overseas retailers?
Under the tax arrangements described in the article, overseas retailers can sell goods online under $1,000 without charging GST, and some imports benefit from duty concessions. Retailers say this creates a GST and duty loophole that favours offshore sellers.
Why are Australian retail leaders like Solomon Lew and Gerry Harvey upset about the GST and duty rules?
Solomon Lew and Gerry Harvey say the rules give overseas retailers an enormous competitive advantage because they aren’t required to levy GST or duty. They argue offshore sellers don’t pay local taxes, don’t employ Australians and undercut domestic retailers’ sales.
What has the government done in response to concerns about online GST and imports?
Prime Minister Julia Gillard has asked the Productivity Commission to conduct an inquiry into the impact of globalisation on the retail industry, including online shopping and whether sales taxes and customs duty concessions on imports are being exploited. The commission is due to report back next year.
Who are some of the retailers and groups mentioned as pushing for change over the GST issue?
The article mentions retail figures Solomon Lew and Gerry Harvey and says an alliance of retailers — including Westfield Group and Myer — has been established to make the sector’s case. Harvey Norman is also mentioned as considering online strategies in response.
Could Australian retailers change how they sell online because of the GST loophole?
Yes. The article reports retailers considering responses such as mounting a campaign against the government and, in Harvey Norman’s case, setting up overseas websites to work around the competitive disadvantage created by current GST and duty rules.
How long will the Productivity Commission inquiry take and what do retailers say about the timing?
The government has commissioned what is described as a nine-month review by the Productivity Commission, with the report due next year. Retailers complain they’ve been lobbying for months and fear the review’s timing represents prolonged government inaction that could harm businesses.
What risks do retail leaders warn about if the GST and duty rules aren’t changed?
Retail leaders quoted in the article warn that many local retailers could struggle or even go broke after peak trading periods like Christmas because of being undercut by cheaper, GST-free imports and duty concessions for overseas sellers.
What has the Treasurer said about protecting consumers and small businesses amid this debate?
Treasurer Wayne Swan said the government is determined to make sure consumers and small businesses "are getting a fair go," indicating the inquiry aims to balance interests while investigating the issue.
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