Since time immemorial, humankind has tried to predict the future, usually with limited success and yet we keep trying. Sometimes we are close and other times we are not. The truth is that nobody can predict what will happen tomorrow.
In January of this year, I provided my predictions for retail in 2016 as follows.
- The oil price would probably stay ‘low’ for 2016 and the dollars saved by households would benefit retailers.
- The AUD would probably hover in the early 70’s for most of the year and imports would be more expensive.
- Interest rates would remain ‘low’
- Terrorism while impossible to predict would escalate.
- The GST could rise before January 2017. If and when it does, there will be a flurry of spending depending on how much notice we get.
- The LVIT would drop but would have no material effect on retailers in Australia because the GST pales into insignificance compared to overseas on line prices.
Let’s see how we travelled.
- Oil generally hovered in the mid 40’s for a good part of the year.
- The AUD was in the mid 70’s, not low 70’s – for most of the year.
- Interest rates have certainly remained low. Probably on a slight rise from now going forward.
- We were largely spared terrorist attacks. On 10 September there was an Islamic State stabbing and on 18 November an asylum seeker set himself on fire.
- The GST is still on hold – we will see what the New Year brings.
- The LVIT is a total mystery and I must confess that I have lost the plot. In August last year Joe Hockey confirmed the GST will apply to all overseas online purchases from 1 July 2017. At that time Treasury confirmed that it had done no modelling but could not explain why. However Hockey despite this said he was confident that the additional tax would raise more revenue than it would cost to administer.
In such volatile times it is rewarding that generally 2016 predictions were not too far out. At the time I commented that 2016 was a difficult year to predict. I had no idea that events in 2016 would mean that 2017 will be even more tricky given the US election outcome amongst other happenings.
I will do my best in the New Year to take a stab at what may happen but I have a suspicion that it will be a tough call.
AN OPEN LETTER TO THE HONOURABLE TREASURER, SCOTT MORRISON
Dear Honourable Minister,
We, the members of the retail industry, are quite frankly confused.
Your predecessor, The Honourable Joe Hockey, in August last year confirmed that the GST will apply to all overseas online purchases from 1 July 2017. At that time Treasury confirmed that it had done no modelling but could not explain why. However despite this, The Honourable Minister said he was confident that the additional tax would raise more revenue than it would cost to administer.
More recently your department is on record as stating that from next July overseas businesses with an annual turnover of $75,000 or more will need to collect GST on goods sold, but your spokeswoman told AAP that the government has no intention of blocking websites to enforce it.
We are now six months from D-day. Please can you inform us precisely how the new system will work together with the latest modelling showing the net gain to the tax coffers.
Stuart Bennie is a retail consultant at Impact Retailing www.impactretailing.com.au and can be contacted at firstname.lastname@example.org or 0414 631 702.