concern by governments that the cost of collecting GST on low value transactions could be higher than the amount actually collected. In discussions last year on the reduction or abolition of the $1000 threshold for GST, the Federal Government indicated it may be willing to act if state and territory governments were prepared to meet any shortfall between the amounts collected and the cost of collection. The small business meeting in Perth was attended by the Federal Minister, Bruce Billson, and ministers from Western Australia, Victoria, Queensland, and Tasmania. The low value imports threshold (LVIT) remains a contentious issue for bricks and mortar retailers who believe it has a significant impact on sales, notwithstanding that international online transactions have been slowed by the fall in the value of the Australian dollar. Australian retailers want the threshold for GST on online purchases lowered from $1000 to just $20, and most states were keen to support this, although Western Australia was opposed to any change. A report by the Productivity Commission in 2011 also argued against the lowering of the threshold, claiming the tax change would result in a greater economic burden than benefit with the collection costs exceeding the revenue derived from the change. The commission said lowering the threshold to $20 would raise more than $550 million in tax, but the cost of processing using the current system would escalate to more than $2 billion. Research by the Australian National Retail Association (ANRA) and Ernst & Young claims the change would provide an economic benefit, ensuring that Australian retailers are competing on a level playing field with online retailers based overseas. Reasoning Last year, describing the threshold as “an anomaly”, Billson said a change would require the agreement of all states and territories, with the key issue for the Federal Government being “tax neutrality and tax efficiency”. Accepting the commission’s warning on the collection costs, Billson said there would need to be a change to the collection system if the threshold was to be lowered. While ANRA, the Australian Retailers Association (ARA), and many chain retailers, including Solomon Lew of Premier Retail, have pushed for the lowering of the threshold, the National Online Retailers Association (NORA) is unsurprisingly against any change, arguing the internet should be seen as an opportunity, not a threat. Cash strapped state and territory governments were warming to a change in the GST threshold, with a review by two former state Premiers, John Brumby and Nick Greiner, supporting the imposition of the tax on purchases from overseas retailers. Concern about the potential gap between collections costs and revenue raised has apparently cooled the enthusiasm of the state and territory governments, notwithstanding the impact on Australian retailers of a tax threshold that is acknowledged as high by international standards. Lew argues Australian retailers are disadvantaged in both their store networks and online businesses, with no local online business capable of reaching its full potential while a flawed two tiered tax system remains in place. Lew claims the Federal Government is pandering to “perceived populism at the expense of sound public policy and failing Australians and the hundreds of thousands of people who work in retail, Australia’s largest employment sector as well as failing Australian entrepreneurs who want to set up new online businesses”. “It is very hard to compete when your own Government is on the side of foreign competitors,” Lew said.