Harvey joins fight against online sales
Retail boss Gerry Harvey says the government should abolish the GST exemption on imported goods, adding his voice to a chorus of retailers rallying against the tax-free threshold. His comment comes ahead of a meeting between state and federal treasurers on Wednesday to consider their options on the issue and assess a report from the Commonwealth Treasury.
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.