State treasurers agree on GST threshold move but retailers not expecting action until post-election

The retail industry is hopeful of eventual change to the GST low-value threshold, but industry leaders say they don’t expect to see anything accomplished before next year’s federal election.

At a meeting between state treasurers yesterday there was in-principle agreement that something ought to be done about the threshold, even though days before, Assistant Treasurer David Bradbury said no immediate action would be taken.

Australian Retailers’ Association executive director Russell Zimmerman told SmartCompany this morning he doesn’t expect action before the election – but remains confident nonetheless.

“The ARA has been working with the government for two years on this issue, and what we have to realise is that it’s not the only problem, it’s only part of the solution.”

“But there are still a lot of retailers that want to see this changed.”

Zimmerman says he would hope, at least, that some action would be taken after the 2013 election.

“I don’t have any insight on this, but before next Christmas I would have liked to see some movement on the threshold.”

“We’re not going to see it go down to zero, and I don’t expect we’ll see anything immediately, either.”

Recently a report into the tax system recommended dropping the threshold to $500 immediately in order to at least gain some revenue from the extra parcel collection. But Assistant Treasurer David Bradbury said that wasn’t going to happen, and yesterday after the GST meeting between state treasurers he repeated that sentiment.

Following yesterday’s meeting, Bradbury told The Australian Financial Review in a scathing comment that if the state treasurers “had bothered to read the report of the taskforce…they would know that any sudden changes to the threshold could potentially cost more revenue than would be collected”.

“No decision can be made about the possible lowering of the threshold until these business cases have been prepared,” he said, referring to some studies the government is preparing on its own.

The government’s response to the GST threshold issue has been conflicted. On the one hand it said it recognises the local threshold is high when compared internationally, but also said it cannot take immediate action until more substantive parcel collection reform has been enacted.

Zimmerman says with the retail industry having fought this battle for two years now, the time has come for action.

Zimmerman says two years ago, the GST argument may have been diluted by the fact Australian retailers’ websites weren’t up to scratch, therefore creating some backlash among consumers. However, now he says the industry should be acknowledged for its efforts.

“Look at businesses like Winning Appliances, or Myer. They’ve gone in and done huge upgrades to their websites.”

“They’re engaging customers in that online space, and they’ve understood they’ve had to move very quickly.”

In particular, Myer and David Jones have spent tens of millions of dollars upgrading their web strategies and creating new websites.

“I think that amplifies the call for the government to take some action as soon as possible.”