On January 22, 2015 I wrote what I had hoped would be my last article on the LVIT (Low value import threshold). On January 19, 2015 Dr Mikayla Novak, senior research fellow at the Institute of Public Affairs, said the government should rule out this anti-consumer and protectionist proposal. “The tax would also be so hard to collect that the costs of extending of GST would exceed the revenues collected. The Productivity Commission found that reducing the GST low value threshold down to $100
would have raised $495 million for the government in 2010-11, but it also would have cost the government $1.2 billion to collect it,” Novak said.
“The only thing extending the GST will achieve is increasing the cost of living for Australians, for no good reason.”
The irony here of course is that by lowering the LVIT it will cost the tax payer more! Someone has to foot the bill.
I recently researched an item on the internet, one of those irritating ones where the supplier has done a fairly good job in preventing non-US residents from buying from a US internet site. Of course there are ways around this but suffice to say that the item costing US$106 could be imported including freight for AUD$230.
The price in Australia is AUD$245 plus postage of $13 totalling $258. A difference of only $28 if you say it quickly or about 12 per cent. Not bad really because minus the GST the price is about on par. This as opposed to the price gouging that takes place by many local distributors.
As an exercise, I called the supplier and asked what was the best they could do for me and after a bit of friendly haggling we agreed that I would pay AUD$230 inclusive of postage. A win win all round including for Australia.
So why not give Australian retailers the opportunity to match prices? Is it partly due to the cultural block which causes many Australians discomfort in bargaining?
In other cultures bargaining is endemic. In many Asian countries it would be freakish not to bargain and it can be great fun. When it is no longer fun, time to stop.
I recall an instance in Vietnam many years ago when I was bargaining for a watch for my daughter. It was good natured and convivial. As I went up, he went down amid much shaking of heads and “cannot”. We were within a small range when I suddenly raised my price above the asking price! The vendor could not understand this and was thrown off his guard for a moment or two. Amid great mirth we settled on a fair price.
Forget the LVIT, start bargaining, give the Aussie retailers the opportunity to respond and carpe diem.
Stuart Bennie is a retail consultant at Impact Retailing and can be contacted atstuart@impactretailing.com.au or 0414 631 702.
