FED:Online buys prompt retail inquiry

AAP General News (Australia)
12-18-2010
FED:Online buys prompt retail inquiry

MELBOURNE, Dec 18 AAP - The growing trend to shop online has prompted a government
inquiry into Australia's retail sector amid complaints by traditional retailers that shoppers
are avoiding paying GST by buying goods from overseas websites.

The federal government on Saturday announced a Productivity Commission inquiry into
the future of the sector and a crackdown on businesses rorting the system to avoid paying
tax.

Traditional retailers want the government to scrap the $1000 GST-free threshold for
imported goods, arguing it puts them at an unfair disadvantage in competing with online
stores.

Assistant Treasurer Bill Shorten said consumers should be able to shop in whatever
manner they choose, including online.

"The case for lowering the threshold has significant opposition, including the cost
of collection and consumer objections," Mr Shorten said in a statement.

""However, we are taking the concerns of retailers seriously, which is why I have asked
the Productivity Commission to look into these issues."

Thanks to the strong Australian dollar, consumers are increasingly turning to overseas
websites for GST-free purchases.

A raft of retailers have complained they are losing out to foreign websites and are
campaigning against the threshold while the likes of Myer and Harvey Norman have flagged
setting up websites to ship goods directly from China to Australian consumers.

Home Affairs Minister Brendan O'Connor said the government would conduct a compliance
campaign to ensure GST and customs duty concession for imports worth $1000 or less were
not being abused or exploited.

"It's important people follow the rules and not try to rort the system," he said.

The crackdown will begin in 2011.

The moves came as Access Economics figures showed Australians spent $19-24 billion
buying goods online in 2009, representing about three per cent of total sales.

The report showed at least 50 per cent and up to 80 per cent of that amount was spent
with Australian online retail outlets.

Communications Minister Stephen Conroy said with online retailing only accounting for
three per cent of the Australian total, there was great potential for it to grow.

Australia's retail turnover was $242 billion for the 12 months to October.

AAP mn/it

KEYWORD: RETAIL

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