Premier joins call for end to GST loophole
Premier Investments has joined other retailers in calling for the new federal government to get rid of the GST exemption on imported goods less than $1000.
The company, which owns clothing chains Just Jeans and Jay Jays, believes lowering the threshold to tax cheaper goods would create a level playing field between local stores and online retailers.
The calls come a day after Myer chairman Paul McClintock said he was confident the Coalition government would address the issue.
Premier chairman Solomon Lew said the different tax rates gave the company's international competitors an unfair advantage.
"I think they understand that there is a need to make it a level playing field," he said. "There's a need to close the loophole. And I think the state governments understand there is [tax] leakage."
Premier says it expects consumer confidence to lift over the the financial year but trading conditions remained challenging.
The company is struggling to compete against the growth of online retail stores, particularly dominant players such as ASOS, which has global distribution networks and fewer costs.
Despite this, it reported a net profit of $174.5 million in the year to July 27, up from $68.3 million during the previous 12 months. This included a one-off $105.2 million adjustment to include the company's 25 per cent equity investment in kitchen appliances maker Breville from early March.
Premier chief executive, and former boss of department store David Jones, Mark McInnes, said jobs would be lost in the next two years if the GST issue was not addressed. "I am absolutely confident that the Liberal government, Tony Abbott, Joe Hockey, they have no desire to put Australians out of work," he said. "They have no desire to put 33,000 Australians out of work in the next two years."
He said the company could be forced to cut jobs if no change was made, but would not guarantee jobs were safe even with the changes. "We don't want to be going about cutting jobs, but obviously if leakage continues in Main Street, Australia, it won't just be us, all retailers will be faced with that situation," Mr McInnes said.
There has been no commitment from the Abbott government to eliminate or lower the GST-free threshold, which could trigger a backlash from consumers.
InvestSMART FORUM: Come and meet the team
We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free