The laughable LVIT debate

tax, GSTIn August last year the federal government shot its mouth off about the low value import threshold (LVIT) and said that the supply of goods under $1000 from companies overseas will attract GST from July 1, 2017. This debate has reached biblical proportions for the past few years and it now appears that the government hasn’t a clue how it will enforce this ruling in only nine months time.

The latest is that overseas suppliers with sales of more than $75K pa to Australia will need to register and collect GST on behalf of the government.   However there is just a small problem – how do they intend to enforce this when overseas companies have no obligation whatsoever to conform?

Not to be caught napping, our brilliant politicians formulated a cunning plan. They will block non-conforming websites on the internet which they can legally do. Just a couple of snags arise here too. How will the Australian public respond to such Gestapo tactics? In this already hopelessly over governed country with a plethora of rules and regulations, what will they do to prevent people from bypassing geo-blocking by using VPN’s (Virtual Private Networks)?

There are companies such as Hotspot Shield and TorVPN that are available online and can provide unrestricted access to websites. And it is not an infringement, believe it or not, for Australians to use this method.

Since day one the debate has raged about the cost of collecting the GST compared to the amount of GST that will be collected. In about the time it takes for a baby to grow in the womb, Treasurer Scott Morrison and his mates better get stimulated to conceive a workable solution to this fiasco. It was always meant to appease bricks and mortar retailers, the odd retail association, or some forlorn ‘has been’ consultants trying to curry favour amongst their dwindling audiences.

Of course, one solution is simply to drop the whole idea. But that is not an option either. Having come out publicly not only with the announcement but also a date, the government is stuck between a rock and a hard place. What about a solution you say? It’s all very well to be critical, but what can be suggested to get Morrison and his cronies out of jail?

The solution is simple. Hold a plebiscite. They only cost $525 million a pop and if my arithmetic is correct, the GST from the first five and a quarter billion in sales will just about cover it.

Stuart Bennie is a retail consultant at Impact Retailing www.impactretailing.com.au and can be contacted at stuart@impactretailing.com.au or on 0414 631 702.

 

 

 

Comments

2 comments

  1. Michael posted on September 16, 2016

    What a poor article about a serious situation. How can the author not see that allowing foreign companies paying no tax here stealing sales away from local companies who pay tax and employ local staff isn't an issue? The current regulations give these non tax paying overseas entities a competitive advantage over local retailers and e-tailers, it's not just an online versus offline issue and to frame it as such is simple and plain wrong. By going down the path the author is suggesting we just export our retail jobs overseas, further damaging our economy. Yes, this is a complex issue and there is no simple answer, and yes the government has left it late and announced nothing of substance to date. However, what this debate needs is ideas as to how to reform the tax system to make local companies more competitive, not dismissive articles with no ideas other than giving up and leading us to more lost jobs and closed businesses. I would have expected better from a site that purports to be for the Australian retail industry.

  2. Peter posted on September 16, 2016

    I don t have a problem with the article and as a retailer here I am also effected, however adding a tax is not the answer as people will continue to shop overseas for many reasons. I have found that overseas are more switched with their websites compared with so many retailers here in Australia who have taken the lazy approach and not listed all their products or they give a very brief description of a product, if at all. Also overseas the variety of goods is larger, with a lot of products available here. The world is becoming a level playing field and we need to adjust to it, its'not just the adding of a 10% GST levy, it's higher wages, rents, OHS compliance, over governing bodies and many other things that are adding to costs of higher prices. This policy is not a good policy and will not achieve any significant change or gains as it cannot effectively be policed. Serious reform is needed on the tax system but I wouldn't hold my breath on that one.

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