Time right to remove GST loophole: Myer chief

Myer chairman Paul McClintock believes the Coalition government will act quickly to repair Commonwealth-state relations, which had become frayed under the previous administration, as a crucial first step in doing away with the GST exemption on imported goods.

Myer chairman Paul McClintock believes the Coalition government will act quickly to repair Commonwealth-state relations, which had become frayed under the previous administration, as a crucial first step in doing away with the GST exemption on imported goods.

Mr McClintock, who has strong connections in government circles, having previously been a secretary to the cabinet and head of cabinet's policy unit, reporting directly to former prime minister John Howard, said there was now no barrier to shutting down the loophole that allows goods, mostly bought online, to enter Australia GST-free if they have a value below $1000.

The $1000 threshold on imports has been a bugbear for the retail sector for years, with executives claiming domestic retailers were at an unfair price disadvantage to their offshore competitors.

An Ernst & Young report cited by many local retailers, including Mr McClintock as he addressed shareholders at the company's annual meeting, stated that 33,000 retail jobs would be lost by 2015 if the GST-free threshold remained unchanged. But Mr McClintock said after the AGM it was an important issue for state governments, and the stars were now aligning between federal and state policymakers to deal with the contentious issue.

"The state governments are much more involved than they were because they are the ones who are losing the revenue. Part of it is waiting to finally get an agreed position about how you do it [administer the collection of GST on imports], but I do think the government has a process now running which should deliver that pretty quickly," he said.

"I just don't see any barrier now to actually closing this down." Mr McClintock said the matter was urgent, as jobs and much-needed state revenue were being lost every day.

There has been no commitment yet from the Abbott government to eliminate or lower the GST-free threshold, and any attempt to charge GST on the flood of items bought online could trigger a backlash from consumers.

Meanwhile, Myer chief executive Bernie Brookes told shareholders he expected continued tough trading conditions into 2014 for the nation's biggest department store as poor consumer sentiment and competition squeezed its earnings.

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

Related Articles