Price hikes of farcical proportions could soon be upon us, comrades, as consumer group Choice has published a submission to the Abbott Government’s tax White Paper – claiming a lowering of the GST threshold on online purchases overseas could see some prices triple.
You with your Amazons, your Urban Outfitters, your Shopbops? Paying up to threefold of the RRP?
Choice’s report, published today, lays down the flaws that could come with a lowering of the GST threshold on overseas purchases – which would apply to online stores. At the moment, Australia’s Low Value Threshold allows all purchases that come in under $1000 to be free of GST.
It’s a handy li’l break for those times when you reward yourself for being a legend – by buying up all the books on Amazon or Book Depository that your shelves can physically handle. It’s one of those rare things that makes life a dream.
Lowering the GST threshold from $1000 to as little as on purchases $20 and over has been brought to the table – in submissions that gained significant traction back in 2013. Even in 2011, the Productivity Commission slammed the lowering of the GST threshold to purchases of $20 and over, arguing that the tangible, tax dollar input into regulating such a system would actually outweigh the profits.
Now, by no stretch of the imagination are we economists. But we have distinct memory of the saying being, “you have to spend money to make money“, not, “you have to spend money to lose money“. Logic, people. Look it up.
Choice says, in its report:
“Poorly designed or implemented changes to the LVT risk reducing competition by restricting Australian consumers’ access to cheaper online markets while producing no overall economic gain.”
Let’s take a moment to think about that last bit. Producing no. Overall. Economic gain. 
While GST is around 10%, the whole “prices tripling” bit comes in when you consider the processing fees that are charged on purchases currently above the $1000 threshold. To process GST on overseas purchases, a fee of around $50 is currently passed on to the consumer. When you’re buying something worth $1000, that $50 makes up 5% of the purchase price – ie. butthurt is relatively manageable.
But when that same $50 fee is whacked on a purchase of, say, a $25 book on Amazon? That’s nowhere near five percent of the cover price. That’s T W O H U N D R E D percent.
It stinks.
Choice’s Matt Levey told the Sydney Morning Herald, “it [lowering the LVT] just reduces competition and hits household budgets.“
You could argue that lowering the LVT has fairly noble intent, by forcing customers who might buy ‘Gone Girl’ on Book Depository for a mad bargain, to hit up their local Dymocks instead. Sure. But when you start making virtually all online purchases financially unviable to the consumer? Dymocks *could* gleefully gaze upon the opportunity of unrivalled competition, and up their prices – just because they can.
Levey told SMH that a smart solution could be relatively easy, if overseas outlets or credit card companies get on board. “We’re suggesting that companies like Amazon and Book Depository add the 10 per cent to the price they charge. The other option is credit card companies can become responsible for collecting the GST.”
A terrifying insight into how prices could rise can be found below. So, for the love of all things both cheap and chic, treat yo self, people. While you still can.
via SMH.
