Sunday, May 26, 2024

Agreement to remove GST LVT welcomed by retailers

The federal and state treasurers commitment to remove the current low-value threshold for all consumer goods bought online internationally has been commended by retailers.

Retail Council CEO Anna McPhee said agreement by the treasurers to ensure all consumer purchases are treated the same under the GST system, irrespective of whether they were purchased from a local or international retailer, is an important step forward in ensuring our tax system is fair and efficient.

“This is sensible reform that delivers greater consistency in our consumption tax system and will mean similar goods and services consumed domestically are taxed equally,” she said.

Modelling from the Retail Council undertaken by Ernst & Young shows extending the GST to all imported consumer goods would result in a net increase in GST collections of more than $1 billion in 2015/16 and $1.7 billion in 2020/21 after collection costs of just $37 million.

The Australian Retailers Association (ARA) has called it “necessary and overdue”.

“The LVIT has caused Australian retailers huge concern, and its abolition is long overdue,” ARA Executive Director Russell Zimmerman said. “The removal of this archaic law is necessary for the growth and sustainability of all Australian retailers.”

Mr Zimmerman added that while they would prefer to see an earlier introduction date than July 1, 2017, they are pleased that the threshold has been entirely scrapped, rather than reduced.

“Australian retailers will now be able to play in the global economy on a level field,” he said. “We look forward to working with the Government on its implementation over the coming years.”

National Retail Association CEO Trevor Evans said the decision is an extremely pleasing result for the retail sector.

“While the $1,000 threshold was introduced with the GST in 2000, the advent of online shopping has seen overseas online retail giants gain a leg-up in our system, while placing an unfair impediment on Australian retailers,” he said.

“Coupled with the proposed action on the Netflix tax, it is pleasing to see the Government is now on the right track to restoring integrity to the GST.”

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