Harvey joins fight against online sales
Speaking to shareholders at Harvey Norman's annual meeting, the chairman said although the retailer was not directly affected by the $1000 tax-free exemption, the policy should be changed.
"This is totally unfair," Mr Harvey said. "It won't make any difference to us, but it is totally unfair."
The National Retail Association has lodged a submission with the Commission of Audit calling for shoppers to be charged GST on overseas purchases worth more than $20. Currently, goods under $1000 bought online from overseas companies attract no GST.
Mr Harvey, whose stores sell furniture and electrical goods, said the company was not affected by the tax discrepancy because most of the goods bought online were clothes and smaller items.
However, he said retail conditions remained some of the worst he had seen and sales had not experienced a huge pick-up since the election.
"Business overall is not bad, but it's not easy," he said. "I don't see how it's going to improve suddenly."
Last week, Myer and Just Jeans owner Premier Investments renewed calls for the removal of the tax-free threshold on imported goods, saying they would be forced to cut jobs unless there was a "level playing field".
The meeting between the Commonwealth and state treasurers will likely add more pressure to the federal government to address the issue, as the states join calls by retailers to shore up revenue.
It is understood that because the states have run the campaign, they will continue to lobby for change.
Harvey Norman has been forced to close two of its franchise complexes in Australia in the past quarter. It reported a 2.7 per cent increase in global sales figures for the period, however, on a like-for-like basis.
Mr Harvey said the company was looking for ways to profit from its property portfolio while the retail sector undergoes major change and continues what he called a "downward spiral".
"I'm not opening shops. None of my opposition is opening shops. There's no point because you can't make money. So we've got to work out, how do you make money?
"We've never been in this situation where we haven't got developments happening. So we are looking for ways to make money out of this company and it may not necessarily be retail."
The company operates outlets in New Zealand, Slovenia, Ireland and Northern Ireland. Its Irish sales have been hit by poor trading conditions in the region.
Harvey Norman is confident it will see positive local sales over the Christmas period despite not seeing a significant uptick in consumer confidence.
In August, it reported a full-year net profit of $188 million, down from $227 million in 2012.
Retailers have stepped up their calls for the government to address the GST issue on the basis that it gives an unfair advantage to online retailers.
But governments have been slow to react given the anticipated cost of changing the threshold.
In 2011, a Productivity Commission report found good grounds to lower the threshold in principle, but concluded it would not be worth the extra cost of intercepting and opening more low-value parcels.
About 58 million parcels beneath the threshold enter Australia each year compared with just 20,000 above the threshold.
Frequently Asked Questions about this Article…
Gerry Harvey believes that the GST exemption on imported goods is unfair to local retailers. Although his company, Harvey Norman, is not directly affected by the $1000 tax-free exemption, he argues that the policy should be changed to create a level playing field for all retailers.
The current GST exemption allows goods under $1000 bought online from overseas companies to attract no GST, which gives online retailers an advantage over local retailers who have to charge GST on their products.
The National Retail Association has submitted a proposal to the Commission of Audit, advocating for shoppers to be charged GST on overseas purchases worth more than $20, in an effort to level the playing field for local retailers.
Harvey Norman has not been directly affected by the GST exemption because most of the goods bought online are clothes and smaller items, which are not their primary products. However, the company is still concerned about the overall fairness of the policy.
Gerry Harvey describes the current retail conditions as some of the worst he has seen, with no significant improvement in sales since the election. He notes that the retail sector is undergoing major changes and is in a 'downward spiral.'
Harvey Norman is exploring ways to profit from its property portfolio as the retail sector changes. The company is not opening new shops due to the challenging market conditions and is looking for alternative ways to generate revenue.
Retailers like Myer and Premier Investments have warned that they may be forced to cut jobs unless the GST exemption is removed, as it creates an uneven playing field that disadvantages local businesses.
Governments have been slow to react to calls for changing the GST threshold due to the anticipated cost of implementing such changes. A 2011 Productivity Commission report found that while lowering the threshold is justified in principle, the cost of intercepting and processing low-value parcels would outweigh the benefits.
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