The origins of the GST tax on online commerce

We first reported on the lobbying efforts of Gerry Harvey in October 2009, when it was reported in the SMH Herald that he was lobbying the government to adopt a GST on online transactions. The lobby group is looking to apply a tax on overseas websites. It is not even clear how they would be regulated....after all, how can the Australian government apply a tax on foreign jurisdictions. So it does not even make sense. The only possibility is if all governments around the world adopted a tax on online commerce. Might we expect a similar move by other retail 'extortionists' around the world? Might we expect Walmart and European retailers to lobby for the same type of consideration.

According to the SMH, people can currently buy goods online costing less than $1000 GST-free. Retailers such as Harvey Norman would like that to be applied to all transactions. The campaign is being launched by Myer, David Jones, Harvey Norman, Target, House, Borders, Angus & Robertson who are launching full-page advertisements in newspapers. Well, I guess they can expect support from the media if they are spending on advertising. Having said that John Singleton is a good friend of Harvey Norman, and both are close to the Australia Labor government.....and they love to tax.

"The ads call on the government to either scrap the GST for locally sold goods priced at less than $1000 or apply the same impost to goods bought from foreign sites".

The problem is that they are morally indifferent to extortion or freedom. They ought to be campaigning against all taxation, and most specifically the unfairness of taxation. But they will also consider increases in tax. It is unlikely the government would scrap GST, particularly in a recession...so its an invitation for more tax.

In coming posts I will be challenging the justification for their claims. Choice Magazine's Christopher Zinn said:

“The big chains should recognise that it's their high prices, limited range and poor customer service that increasingly encourages people to use the internet".

I don't agree with that view. The reality is that retail stores do offer a greater range of products than smaller stores, so I don't accept that they are the complainants. The reality is that retailers are at a disadvantage in some respects, but they have not positioned themselves to benefit. They are really paying the price for not launching their own online commerce websites....upon which the ought not to pay tax. This is part of the problem....they would under the current system.

It has to be acknowledged that some customers are able to go to the retail stores to look at products and to select a product, and then go to the online store to purchase it. This is less common these days however because there are plenty of product review websites online. It must be added that large retailers do not offer very good service. i.e. You are kept waiting, and often the product advice is poor, even misleading. Simply, these companies are paying the price for not moving online. They were living in a dream world, and they thought they could keep their profit margins.