ARA chief Russell Zimmerman says lowering the Low Value Imports Threshold (LVIT) needs to be a key discussion issue for the states during the federal tax summit starting on October 4.
Zimmerman said the discussion needs to focus on a tax neutral policy which could be achieved through improving Customs and parcel processing inefficiencies to a process which opens up additional revenue stream for states.
“The federal tax summit is a chance for State Premiers and Treasurers to call for the LVIT to be lowered to enable a GST revenue stream for States which under the current system is lost.
“The Productivity Commission estimates State governments are losing $578 million through the current LVIT loophole with more and more Australian’s buying goods online from overseas retailers.
“According to a PwC and Frost & Sullivan report around 12 per cent annual online retail growth is expected and up to a third of all online purchases according to the Productivity Commission will be coming from overseas with State Governments losing more GST revenue in the future if this loophole isn’t fixed.
“Reducing the LVIT helps level the playing field for Australian retailers competing with their overseas counterparts marketing their products to Australians.
“This is about making sure the trading environment is more equal across the board and to remove some of the competitive disadvantage that currently exists for Australian retailers.
“The ARA believes the current and projected growth in online shopping is positive and creates opportunities for Australian retailers to be in the online space as well as in store to reach a multi- channel consumer.
“The removal of the competitive disadvantage currently imposed by the LVIT threshold is an absolute priority for retailers, as well as State Governments set to gain GST revenue which they rely on for reform and infrastructure,” Zimmerman said.
