Retailers still hopeful of LVIT review

 

onlineThe conclusions in Inside Retail PREMIUM’s story on the low value import threshold (LVIT) last week have been challenged, with retail trade associations assured that a reduction remains a live issue.

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Inside Retail PREMIUM reported that the Federal Government will not reduce or abolish the threshold on online transactions because the states have been unable to agree a preferred workable approach on the issue.

Russell Zimmerman, head of the Australian Retailers Association (ARA), is confident the threshold issue remains on the Federal Government agenda after assurances from Bruce Billson, the Federal Minister for Small Business.

Zimmerman blames the Western Australian State Government for the lack of progress on the issue, claiming the state has refused to agree to any changes on the GST unless it gets a “bigger share of the GST pie”.

Inside Retail PREMIUM noted that WA was opposed to a change in the threshold in our article in the last edition and, as Zimmerman points out, the problem is that the WA State Government wants to expand the debate on GST allocations.

While Zimmerman has received assurances that the Federal Government is willing to consider changes to the tax threshold, the issue is now entangled in a broader and politically charged tax debate driven by the Federal Government.

At a September 19 meeting of state and territory treasurers with the Federal Treasurer, Joe Hockey, the Federal Treasurer left the LVIT issue in the hands of the states, noting that the state and territory governments “had not agreed a preferred workable approach on this issue”.

Hockey suggested the states and territories “may choose to raise this (the LVIT) as part of the Tax White Paper process which will be developed throughout 2015”.

Prime Minister, Tony Abbott, and Hockey have both canvassed a review of the roles and responsibilities of each level of government and of tax measures, including a potential increase in the level of the GST from its current 10 per cent, or a broadening of the GST to products and services that are currently exempt.

The immediate reaction of the states and territories, especially Victoria, NSW, and Queensland – all facing imminent state elections, was a resounding rejection of raising or expanding the GST.

The reaction of the state and territory governments echoed the WA Government’s position on the LVIT to the extent that they all wanted a higher return from the tax pool for their states.

While the ARA remains optimistic that a proposed reduction or elimination of the $1000 threshold for exemption from the GST for online purchases from overseas retailers is still a live issue, it is now entangled in a much broader and more complicated taxation debate.

In the expectation of the Federal Treasurer, a review of the LVIT is unlikely to be considered before late 2015 at the earliest and, then only if the states press for a change to the threshold in their submissions to the Taxation White Paper.

Zimmerman concedes there will be no move on the LVIT GST issue unless “self-interested state politics dramatically change in the near future”.

“Both the new and previous Federal Governments have been gradually, if sometimes reluctantly, moving forward on the issue,” Zimmerman said, responding to the Inside Retail PREMIUM story on the GST threshold.

“We know we have had heroes on this issue such as NSW Premier, Mike Baird, and Bruce Billson, but there now appears to be a villain in the mix.

“The villains working against the best interests of retailers, even in their own state, have been the WA Government.

“It has to be said this action tops the usual self interested obscenity which has been witnessed over many years of federation by a number of state governments.

“The only path to change is to never give up, and for that reason we will be re-engaging with all key stakeholders to once again push the case to change this unfair tax arrangement at all levels of government.

“We will also be sure to target those governments not acting in the best interests of their local businesses,” he said.

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