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EYE-BALL Guru on – Retailers and bureaucrats don’t understand – high A$ value responsible for off-shore purchases –

December 4, 2012
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Title:
– Retailers and bureaucrats don’t understand –
– high A$ value responsible for off-shore purchases –
| Author: EYE-BALL Guru | 4th Dec 2012 |
The last few years has seen persistent lobbying from Australian Retailers to impose GST on offshore purchases under the current threshold of $1000.   In a Treasury study into this offset – the results indicate a confused and conflicted summary.   Read story below:

Retailers slam GST break inertia


| Author(s): Blair Speedy, Michael Owen and John Ferguson | Date: Dec 4th, 2012 | Link to On-Line Story. |

RETAILERS have slammed the government for refusing to abolish the GST exemption for offshore internet shopping, despite admitting it unfairly benefits foreign companies at the expense of local businesses.

A Treasury Task Force report in September recommended lowering the $1000 threshold at which the tax break for goods bought from foreign websites applied, and found the additional tax revenue would more than cover the costs of collection.

In releasing the government’s interim response yesterday, Assistant Treasurer David Bradbury said there was still a risk that revenue would not cover costs and neither Australia Post nor Customs could handle the massive increase in parcels that would require processing.

“To simply reduce the threshold from $1000 to $500 would mean instead of processing 20,000 parcels every year, we would now be expecting Customs and Australia Post to process 1.23 million parcels every year,” he said.

“It would be irresponsible for government to make a rash decision to reduce the threshold without working through what investments and what changes and what reforms to the processing of parcels needs to be undertaken.”

Australian National Retailers Association chief Margy Osmond accused the government of dragging its heels on the issue, which has already been examined by the Productivity Commission and the GST review panel, which last week proposed halving the threshold as soon as possible.

“We now have three reports and the government has accepted the current situation penalises local retailers — the government’s own report says reducing the threshold to $100, or less, would provide more than enough revenue to pay for collection of the tax. To drag our tax heels will only add to the woes of retailers,” she said.

Fellow industry body The Australian Retailers Association also urged the government to make haste.

“While the ARA appreciates moves to put in place processes to reduce the threshold, it should be noted the industry needs it to happen urgently,” said ARA executive director Russell Zimmerman.

Mr Bradbury appeared to rule out scrapping the tax exemption altogether, saying that such a move would require 40 million parcels to be assessed for GST each year.

The task force estimated that Australia Post and Customs would require between $25 million and $40m to upgrade their systems so they could process the additional parcels that would result from halving the threshold, but notes the final cost could be higher.

Mr Bradbury said the government would begin “preparing business cases and possible implementation plans” for a change to the tax break, including pushing the states to commit funds for infrastructure investment.

CHOICE chief executive Alan Kirkland backed the government’s decision to delay any decision until it had conducted a full analysis of the likely costs.

“CHOICE fully supports a level playing field for Australian retailers, and we accept that if there is a business case for reducing the threshold cost-effectively and efficiently, it should be done.”

The South Australian and Victorian governments indicated cautious support for the plan.

ADDITIONAL REPORTING: MICHAEL OWEN, JOHN FERGUSON

This is a beat-up and the story above goes nowhere near the real reasons at the heart of the problem.

This is a story highlighting a bigger problem than the journalist’s connected with the story – and there are 5 names on the by-line and credits.  None were cognisant enough to offer an opinion on what purpose the GST increase would serve, or where the GST offset was in relation to the cost of goods off-shore when compared with domestic prices.

On can only assume that none understood the bigger picture their story is a part of – that being the ‘cash and carry’ trade raping Australia for the last 10 years or so.   To read EYE-BALL Guru’s latest post on the ‘cash and carry’ trade – click here.

Shoppers are ever wary and they know that the high value of the $A means they get more ‘bang’ for their ‘buck’ if they buy on-line in off-shore markets.  They don’t have to travel to get the advantage but that is a negative for Australian Tourism as well if they do.  Off-shore travel is cheaper and less expensive than holidaying in Australia because of the high A$, and one of the main reasons the Australian tourism industry is in the sewer.

Now our smart bureaucracts at the Treasury have failed this Nation for the best part of 10 years – they have failed to forecast to recognise the real cost to the Australian economy as a result of a high A$ value.  In recent months the cost of high A$ value has become a talking point, and still they have failed to come up with any policy to reduce the value of the A$ rise and have it return to 30 year averages around A$0.75c.

There is an obvious reason – why would they want to draw attention to the 10 year $1 trillion-dollar export revenue loss under-mining Australian commerce.  It has been a gross case of economic mis-management and they still have no idea what they can do to fix the problem.

The pressure coming from the Retailers Association for a change in the threshold level of $1,000 before GST kick’s in – is deterrent value at best.

Reducing the threshold level is a desperate stunt to try and have shoppers return their on-line purchases to domestic retailers.   This is such a ‘no-brainer’ of a policy investment.  There is no winnable outcome.   Shoppers lose, the retailers will still lose, the GST collect will most probably be negative, and all that happens is Australian’s will pay more of goods with nobody in Australia making money.

The report above confirms the confusion on whether the tax collected would cover the cost to impose the tax.  So what is the benefit of doing the research if not to appease the ‘screaming’ Retailers Association.

If Australian shoppers can figure out the maths and benefits in the value of a high $A value, we should reasonable expect that the Treasury think-tanks, would be advising the RBA, and in turn the ‘Dunce-hat’ wearing Treasurer Wayne Swan, that the base cause of all Australia’s current and future economic problems all stem from the high A$ policy.

All the high A$ does is make imports cheaper, leading to an impact on the domestic employment market – this has been evident over the past few years where well established business’ have been being forced into closures and/or forced redundancy’s.

This site has from its debut slammed the RBA and the Treasurer for their ‘head’s up their arse’s’ no-care attitude in allowing overseas investors to dominate the A$ value – all to the detriment of Australian commerce and the lessening of A$ revenues for Australian industries.

Tourism was built in this nation on a ‘cheaper holiday’ for overseas visitors because of the low international currency value.   40 years later that industry can’t compete in a global marketplace when our relative costs compared to 40 odd years ago are now among the most expensive in the world.

This GST being asked for Retailers is not the real issue – how can a Government tax increase retail sales if the 10% tax does not match the discount offered by off-shore retailers.  If Australian retailers tried to become competitive with off-shore retailers, they would go bust.

This Retailer Association request is deterrent value at best and goes nowhere near offering a solution to the domestic retailer problems.

The fact that the Treasury Dept spent time on this policy initiative demonstrates the mushroom bureaucracy we have – public servants filling their days with research that has no benefit to the economy other than to create the need for more public servants on the taxpayer dime.

The Retailers Association need a good lobbyist – someone who can give them focus on where the problem lies – the high value of the A$.  Can you imagine a revolt by miners, farmers, tourism operators, retailers, and the like all joining forces to lobby the Government over the high A$ value?

For as long as the currency remains at these levels – the Australian economy will continue its slide – turning us into an elitist economy where the gap between the have’s and have not’s will widen further.

Here is a message to Mr Wayne Swan and Mr Glenn Stevens – get your head out of your arse and look at the problem without the politics.

Please – if you found this story to your liking and would like to promote it to your social media contacts – i.e. Twitter, Facebook, or other icon linked account below – please click your favoured Icon(s) to promote the story.  Thankyou.


Have your say where it counts: – contact your Local Federal Representative via the links below and let them know how you feel about this, or any other topic that you feel strongly about – or you can just post a comment below and let off some steam.


The EYE-BALL Guru …

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  1. david the pragmatist
    December 4, 2012 at 9:33 am

    A subject the writer knows little about…..retailing that is. I am a retailor and it is very poignant!
    The threshold is an oxymoron and should be the same for offshore retailers as that, that applies to onshore. Governments arguing about it, is an unbelieavable waste of time.

    Lets eliminate the first issue that the writer “does know about” ie the “carry trade” it is not the issue here!.
    Secondly some of the major retailers such as Amazon, Apple and a myriad of offshore retailers would have a government instruction to collect and pay GST though their ability to do so voluntarily. Other wise they will face a GST tax fine through the customer base that supports them. lets see how many consumers want to buy goods from offshore if they know they can be fined 10 times GST if the retailing company has not collected GST in their sales routine. Customs can “speck check and not add to their costs in the slightest”
    This issue is not about the Australian dollar, its about the survival of Australian retailors, big and small!

    If the idiots cannot see this no wonder our manufacturing, tourism and export industries are in the mess they are in because of such things as the carry trade, that is where the “crats” and the like cannot see. This on a smaller level is an example of the myopic vision that plagues our country.

    If no one understands what I am trying to say (in a readable size) please come back and I will go into more detail.
    The simple process is self assessing and a government rule. Big Brother can actually work in this situation.

  2. December 4, 2012 at 9:55 am

    As usual David the Pragamist is the monkey in the cage people throw peanuts at –

    There was never any pressure on the GST threshold in the early 2000’s when the A$ began its rise … the butterfly effect has taken effect you mooron …

    If the A$ was not at these current $1.04 type levels then shoppers would not be buying in off-shore markets – have the Retailers look to other reasons why they are going bust.

    The high A$ value cost jobs – lessens the domestic spending power, that is then attracted to off-shore purchases – causes career changes – i.e. Tourism, farmers and miners receiving reduced A$ returns … it is all about the A$ value …

    The Retailers in Australia suffer under the impact from a slowing economy – what is slowing that economy – poor Governemnt? – lack of confidence? – or domestic companies shifting their workforce offshore for cheaper options … all at the expense of Australian jobs and less spending power in Australia.

    If the Retailes can’t see this and respond in ways to reduce A$ costs – then they will go bust … the commentator this reply is directed at is a retailer … and he thinks a GST on off-shore purchases will increase his domestic sales … poppycock you dunderhead …

    The 10% GST is not equal to the 35% rise in the A$ off its mean average over the last 30 odd years. It is a blimp if introduced and nobody makes any money out of it . least of all the Treasury in collecting the tax.

    Get out of your own way David … you’re a smart person … I thought you would have your head all around this … maybe turning 60 the other day has pushed you over some threshold moment …

  3. December 4, 2012 at 10:23 am

    David – you presume that the consumer will pat the fines if GST is not collected – that’s a long stretch… point of sale would wear the fine … and then if it is off-shore how does Australian tax collectors go about recovery … the cost would outstrip any benefit …more to what the story was about …

    Perhaps I was harsh on you … but to me it still comes back as a ’cause and efect’ of the high A$ – the Retailers are the dunmfucks in this equation thinking GST threshold tampering would make a difference … and that you agree with … I think?

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