Tax threshold ‘won’t change web shoppers’

Colin Kruger
January 23, 2013
The Age

LOWERING the tax-free threshold on goods purchased online will do little to change Australian’s shopping behaviour, according to research by MasterCard.

Just 18 per cent of 1250 respondents to a study conducted on behalf of MasterCard said they ”would be more inclined” to shop at local sites if the GST threshold was lowered from its current level of $1000.

Among the online shoppers surveyed, 38 per cent said a change to the threshold would have no effect on their behaviour while 24 per cent said any move ”would only cause them to buy less often”.

MasterCard executive David Masters said the results indicated that changes to the GST threshhold were ”not enough to substantially change the shopping behaviour of Australians”.
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This is despite the fact that – all things being equal – most survey respondents expressed little preference between overseas and local online sites for a wide range of popular goods. For make-up and clothing accessories, only 9 per cent of respondents had a preference for overseas online retailers. Around 57 per cent said they were not concerned whether the vendor was local or overseas.

The most significant bias was for book-buying, with 16 per cent of respondents expressing a preference for overseas vendors.

The big swing factor was, of course, price, with 86 per cent saying they preferred to buy from overseas sites due to the fact it was significantly cheaper. A better range of goods was another reason given by 62 per cent of respondents when asked why they preferred overseas sites, but they were also preferred for ease of navigation and for offering better information about a product or service.

The survey did not take into account extra charges that would apply to popular online purchases such as clothing and cosmetics.

According to research from Macquarie, applying both GST and duties to clothing would raise online prices by 21 per cent. The cost of cosmetics purchases online would rise 15.5 per cent, which ”eliminates much of the existing price discrimination that exists”, Macquarie said.

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