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Forget GST: It's The Delivery, Stupid

By Oonagh Reidy | Sunday | 29/09/2013

It's not the prices that are driving Aussies online, says Choice.

A new CHOICE survey of online shoppers reveals just 12% said saving on "duties and taxes by purchasing on overseas websites" was a reason for buying online. 

Aussie shoppers do not pay GST on goods purchased from overseas websites, worth under $1000, under current GST rules. 

The survey also found that although many do head to online stores to get a bargain, the main reasons relate to convenience and delivery, rather than price.  

The top reason Australians shop online is so they can do so at the hours that suit, followed closely by the convenience of home delivery, the Choice consumer survey shows. 

Several high profile retailers have campaigned vociferously on the GST issue since 2011, including Gerry Harvey, although have been silent on the issue after a major consumer backlash. 

Betta CEO Graeme Cunningham recently told CN, he believes "an increase in GST, in isolation, would have a potential negative effect on consumer confidence".  

And Choice agrees.

The retail sector is facing some "real and significant challenges", but says this research shows that the low-value-threshold (LVT) is not one of them. 

For consumers after a bargain on overseas sites, most claimed they save much more than 10%. The survey showed that 68% of consumers who buy from overseas sites save more than 15%, while 43% saved over 25%.

CHOICE research last year found that Australians are paying around 50% more (than US consumers) for computers, software, and digital music.

Even if the GST was applied, overseas websites would usually still be cheaper, says Choice. 

It is generally believed the cost of collecting the GST on these goods would be more than tax revenues collected. 

"Lowering the threshold should not rely on inefficient costs of collection - whether paid by government or directly by consumers - outweighing any benefits, which will place even more cost-of-living pressure on households," the consumer advocate warns. 

The threshold should be lowered if it can be done cost-effectively and efficiently, without burdening consumers with massive fees. 

The Treasury is currently producing a business case for lowering the threshold, which is soon to be released. 

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