Top retailers soften their internet GST campaign

BLAIR SPEEDY
November 01, 2012
The Australian

BILLABONG chief Launa Inman has conceded tax exemptions on internet shopping are unlikely to be scrapped, while Woolworths supermarket boss Tjeerd Jegen believes it was wrong for retailers to push for GST to be levied on online purchases.

Speaking at The Australian’s forum on the future of retail, Ms Inman said it was understandable that retailers would want online shoppers to pay GST.

“But let’s be realistic — it’s not going to happen,” she said.

“We have to learn to adapt. It is a global world now and our challenge is just to get out there and actually make it happen.”

Ms Inman’s comments are a substantial turnaround from her former role as chief executive at Target, one of 21 retail chains that put their name to an advertising campaign in January 2011 calling for GST to be levied on internet sales.

The retailers, which also included Myer, Harvey Norman and the Premier Retail stable of brands, including Just Jeans and Portmans, warned that thousands of retailing jobs would be lost unless the tax exemption on purchases of less than $1000 was scrapped.

Ms Inman, who left Target in November last year before joining Billabong as a consultant in February and taking the top job in May, said retailers faced a range of cost pressures that were more important than the GST.

“I don’t think that’s just the issue of the GST, I think it’s much more than that — it’s rents, it’s labour, and all sorts of things,” Ms Inman said. “It’s about how effective we can be at going out there and finding product offshore at better prices than we do today and understanding the nuances of where we can save on duty and just be much smarter when it comes to sourcing a product.”

Mr Jegen, who quit as chief of Tesco Malaysia to join Woolies in October last year, said he disagreed with the campaign to scrap the GST exemption.

“There’s a lot of debate about the GST thresholds for overseas imports for people buying online, and people would like to reduce the GST threshold, and I think it is wrong,” he said.

“I think retailers shouldn’t ask for increases in taxes for customers. I think we should provide better prices so there’s no need for you to go online and buy stuff in America.”

The GST campaign has failed to gain traction amid an outraged response from shoppers, while the federal government has previously rejected calls to get rid of the exemption on the grounds that the tax revenue gained would not cover the cost of collection.

However, an investigation by a government taskforce found costs would be covered if the exemption was reduced to $100, with shoppers charged an average of $60 per parcel.

The government has said it will consult industry stakeholders before making a response.

Meanwhile, Mr Jegen said the line between online and traditional retailing would become increasingly blurred over the next 12 months at Woolies as smart phones are integrated into the sales process .

“I think the future is actually with your mobile phone, with your app, we’ve got 1.9 million people who have actually downloaded our app . . . I can see a day where you can use your app on your iPhone or your Android phone to actually scan your products in store, and then with an NFC chip, you just pay with your phone and leave the store,” he said.

NFC, or near-field communications, is used in “contactless payment” systems such as Visa PayWave, which allows cardholders to make purchases without a signature or entering a PIN number.