The treasurers meet in Canberra on Wednesday with Federal Treasurer, Joe Hockey, to discuss the issue.
At present, overseas purchased goods valued at less than $1000 are exempt from the 10 per cent consumption tax.
Local retailers want the threshold lowered to $20, while the states and territories argue they are missing out on much needed GST revenue.
“It was a very positive discussion, it is clear there are a lot of consensus across the room,” NSW Treasurer, Mike Baird, said after the talks in Canberra.
“We need to do this.”
The business case for lowering the GST free threshold is close to being finalised and key planks were talked through by the treasurers.
“If there is an agreement, we will come together – that is, the states and the federal government will work though every line of that business case,” Baird said.
“We’ll ensure that whatever model is considered it will be done in the most cost effective way.”
The treasurers will meet again in March next before a final decision is made.
South Australian premier, Jay Weatherill, agreed the treasurers were of the view that the GST threshold should be lowered from the current $1000.
“The whole meeting generally took the view there needs to be improved integrity measures, which includes the threshold, but we aren’t yet at reaching an in-principle agreement about that,” he said.
While the proposed move “doesn’t have a dramatic effect on revenue”, it does go to the integrity of the overall GST collections system, he added.
However, consumer advocates have labelled the proposal an “internet tax” designed solely to prop up the domestic retail sector.
If the threshold was cut to $20, and Australia adopted the UK’s assessment process, Choice says the cost of a $20 parcel would rise to more than $35.
The UK Royal Mail charges a STG8 ($A13.60) fee for assessing a parcel for value-added tax and customs liability.
“If you lower the threshold without streamlining the process, you turn every parcel-delivery business into a doorstep tax collector,” CHOICE director of campaigns Matt Levey said on Tuesday.
Choice research shows only 12 per cent of shoppers use the internet to escape the GST.
The majority shop online because of the convenience of getting products delivered to their door.