Online sellers rail at GST push

Andrew Colley
November 20, 2012
The Australian

AUSTRALIA’S top online sellers association has accused supporters of a plan to dramatically cut the GST-free threshold on imported retail goods of hypocrisy for targeting them over giants such as eBay and Google.

Phil Leahy, founder of the Australian chapter of the Professional eBay & E-commerce Sellers Alliance, said the plan was driven by traditional retail lobby groups and was inherently unfair.

A proposal to lower the GST-free threshold on low-value imports (LVIT) from $1000 to $30 is expected to be taken to Wayne Swan next month.

The proposal is broadly seen as a move to return competitiveness to the bricks-and-mortar retail sector lost to online importers whose goods are not subject to the 10 per cent GST until their value exceeds $1000.

However, Mr Leahy said local authorities should examine the tax obligations of online giants such as eBay and Google, which were not required to levy GST for services. In Britain, Google’s Adwords services were subject to Value Added Tax, but Mr Leahy said the company had no GST obligations here.

“This is being led by the (Australian) Retailers Association. It’s promoted as helping the country and getting more money,” Mr Leahy said.

“Well, then you would focus on companies like Google and eBay who don’t pay GST, have large offices here, who have services, and there’s billions of dollars being spent with these companies.”

“The real issue should be that if you’re going to look at GST you should look at it properly across the board.”

The plan to lower the LVIT was agreed last week at a meeting of state and territory treasurers led by NSW’s Mike Baird. They will seek approvals from their governments before taking the proposal to federal government.

Late last week, a spokeswoman for Mr Baird declined to say whether extending the GST obligation to companies such as eBay and Google was under consideration. “The Treasurer acknowledges that there are a number of options that need to be worked through and part of that process will be engaging with stakeholders on their feedback and concerns,” she said.

Ebay declined to comment directly to questions concerning its local GST compliance activity.

“It is the responsibility of anyone selling on eBay to comply with all relevant tax obligations and we provide information for sellers about this on our site. Ebay itself is an international and global marketplace and we work with and comply fully with all applicable tax authorities and regimes,” a spokeswoman said.

Google did not respond to requests for comment.

Google, which bills for marketing and advertising services it supplies here through its Ireland subsidiary, has frequently been under the spotlight over the apparent disproportion between the tax it pays in Australia and the revenue it generates.

In the 12 months to September last year, Google reported $201 million in revenue. It is estimated to have an 88 per cent share of Australia’s $1.4 billion online directory and advertising market.

There have been several reports on the benefit of lowering the GST threshold for imports of low-value goods. A 2011 report by the Productivity Commission found the cost of collecting the tax would offset any increase in government revenue. But an Ernst & Young report this year found removing the LVIT would preserve 33,000 retail jobs by lifting domestic retail sales by $12bn.