ALP Senator Katy Gallagher spoke out in parliament today against the proposed Online Shopping Tax which will see low-value imports taxed at 10%, hurting our consumers and businesses as well as potentially damaging our international trading relations.
A Senate report found serious deficiencies in the government’s proposal around the enforcement, compliance and potential fallout of the new tax and its collection model which requires vendors, freight companies and even online marketplace platforms to register with the Australian government to collect tax on their behalf. The proposal has been panned as many of these companies merely serve as intermediaries linking buyer and seller and do not deal directly with either the goods or payment process.
The government is nonetheless trying to rush the motion through parliament just a few months after major online marketplaces and retailers – including Amazon and eBay, declared that they may cease selling to Australians because of the burden of collecting the tax on the government’s behalf.
Speaking after the bill’s second reading, Gallagher noted that it “...will have a significant impact on Australian retailers and consumers alike, as well as broader implications for how the Commonwealth will levy taxes and collect revenue well into the future.”
The Senator noted the concerns raised by diverse stakeholders ranging from consumer groups to Australian businesses to Accounting bodies. “I do not believe there has been a stakeholder group—ranging from the biggest international ecommerce platforms all the way down to domestic microbusinesses—that has not sought out members of the opposition to raise their concerns about this proposal.”
Issues raised during the recent inquiry included that it will be costly and difficult to enforce compliance and that costs of enforcement will be passed on to consumers.
“Treasury anticipates that less than one-third of liable firms will be compliant by July 2019. Treasury evidence also revealed that, even after half a decade of operation, they expect the compliance level will hit maturity at just over 50 per cent in 2022-23. how a compliance rate of just over half can be expected to level the playing field for local retailers, as the government has been suggesting, is genuinely baffling.”
The Senator elaborated that the measure could leave Australian consumers vulnerable to fraud and scams.“...the measure's complexity and the low levels of estimated compliance would provide disreputable firms, including those who might potentially levy but not remit the GST, with an unfair price advantage over both complying offshore and local retailers.”
“Similarly, the inquiry found that Australian consumers can be expected to bear the cost for the government's ill-conceived design with the Senate inquiry coming to the view that the measure is likely to lead to increased prices.”
It was further noted that consumers could be slugged with higher prices – both due to the costs of implementing the model as well as the potential closure of online marketplace platforms to the Australian market with this ”leading to less competition, less choice and higher prices for Australian consumers.”
Following these comments Gallagher and the ALP have recommended amendments to the bill which would delay its implementation for a year and would require an inquiry by the Independent Productivity Commission into the bill’s enforcement and potential ill impacts.
Though the ATA commends Gallagher for highlighting valid and serious concerns, we questions the merit in the Labor party pushing for the bill’s passage with a later implementation date prior to any independent Production Commission inquiry. What point would this inquiry into the bill’s viability serve if its findings come out only after the bill is passed?
The full transcript of Senator Gallagher’s speech can be viewed here.
The Senate committee report can be viewed here.
An open letter against the bill from a coalition of 18 peak taxpayers’ advocacy groups worldwide can be viewed here.
The ATA’s submission to the inquiry can be viewed here.
Satyajeet Marar is the Director of MyChoice Australia and a Research Associate with the Australian Taxpayers’ Alliance.