The nation’s treasurers will gather in Canberra on Wednesday to try and thrash out an agreement to lower the $1000 threshold.
Local retailers want to see a more level playing field given many foreign goods are GST-free under existing rules, while the states and territories argue they are missing out on much needed GST revenue.
But consumer advocate Choice believes consumers and the economy will suffer from what it labels an “internet tax”.
“Australia does not need a new tax on the internet, designed to prop up parts of the local retail sector,” Choice director of campaigns Matt Levey said in a statement on Tuesday.
If the threshold was lowered to $20 and Australia adopted the UK’s assessment process the cost of a $20 parcel would rise to more than $35.
The UK Royal Mail charges a STG8 ($A13.60) fee for assessing a parcel for VAT and customs liability.
“If you lower the threshold without streamlining the process, you turn every parcel delivery business into a doorstep tax collector,” Levey said.
“Bizarrely, the higher threshold would not address the main reasons Australians shop online overseas, which has nothing to do with the GST.”
Choice research shows the main reason Australians buy online is so they can shop at the hours that suit them, followed closely by the convenience of getting products delivered to their door.
Only 12 per cent nominated saving on duties and taxes.