Report recommends dropping GST threshold, but neither Government nor Coalition moving quickly

The Federal Government’s investigation into lowering the GST-free threshold has recommended action should be taken to improve parcel processing procedures and tap into the revenue streams made possible by the huge influx of goods bought from offshore.

But at this point it appears that neither the Federal Government nor the Coalition is keen to act on the report – dashing the hopes of retailers, who said yesterday the report validates their concerns.

Assistant Treasurer David Bradbury gave no indication in a statement yesterday there would be any action taken on the report.

“The Gillard government is committed to working together with the sector to ensure a strong and prosperous future for retail in Australia,” Bradbury said in a statement that thanked the taskforce for its work.

Coalition small business spokesman Bruce Billson also said in a statement that while he hasn’t yet read the report in full, he intends to investigate it fully.

“This isn’t a cut and dry issue. The report is some 300 pages and involves some complexities in regards to flow on, administration and regulation.”

Billson said the Coalition would continue to speak with the industry on the issue.

But Russell Zimmerman, executive director of the Australian Retailers Association, says the report not only validates concerns that local retailers are operating on an uneven playing field, but makes a case for why the parcel processing procedure needs to be addressed.

“I don’t think the government has much of an option but to do something,” he said this morning.

“The volume of parcels is going to increase anyway. There are now good reasons for the government to look at this.”

Australia Post has suffered a huge backlog of parcels due to the influx of offshore shopping. While retailers want to tap into the possible GST revenue attached to these parcels, the Productivity Commission said last year there are too many problems with shipping procedures.

As a result, collecting the tax would take more money than the revenue it would generate, depending on the level of the threshold: The lower the threshold, the higher the costs due to the larger number of parcels to inspect.

But Zimmerman points to a recommendation that states “due consideration be given to a staged introduction to ensure a smooth and efficient transition”.

This would mean the threshold would move incrementally.

“The government now needs to consult and work with organisations like Australia Post and courier companies,” says Zimmerman.