Labor’s assistant treasurer Andrew Leigh says the opposition is taking eBay’s threat to block access to Australian shoppers “extremely seriously”, as debate rages over the government’s new tax on online shopping.
The retail giant warned Parliament last week that the “most likely outcome” if the Coalition pressed ahead with its plan to impose 10 per cent GST on imported goods would be for its website to restrict Australians to buying from local sellers only.
Ahead of Senate hearings on Friday, Dr Leigh – an economist – told The New Daily the threat proved the government “hasn’t been working well enough with one of the major players in the sector”.
“These are the guys who actually have to do the tax collection, so we have to take these concerns extremely seriously.”
Dr Leigh said Labor supports the idea of “tax equity”, so Australian retailers can compete on price with foreigners. But he criticised the government’s “dog’s breakfast” of a collection model, and its “extremely rushed” and “ham-fisted” implementation.
“We are deeply concerned the government is going into this without a regulatory impact statement and with so many of the people who will actually have to implement it having very real concerns about the workability of the law,” he said.
“Everything we’re hearing, and I suspect what will come out of the hearing on Friday, is that the very people in charge of collecting the GST are saying it can’t be done on time.”
The government wants to force all online marketplaces above a certain threshold ($75,000 in sales a year) – including eBay, Amazon and AliBaba – to charge 10 per cent tax on every product they (or their website’s users) sell to Australians.
Currently, GST is only charged on foreign goods if they exceed $1000 in value. Dropping the threshold to $0 was the brainchild of former treasurer Joe Hockey, and the legislation was supposed to be voted on this year and put into force from July 1. But with three months to go, it is stuck in a Senate committee because of concerns over implementation.
“We’re the first jurisdiction in the world to be moving in this direction,” Dr Leigh said.
“Sometimes it’s good to be the first mover, but if you know you’re going to be the first, as the government did when it announced this a couple of years back, then you owe it to industry to have the laws drafted well in advance and have real certainty.”
Labor and eBay’s concerns have been echoed by experts in the field.
UNSW tax law expert Kathrin Bain said the government’s model “would just cost more to collect than it would generate”.
“Until there is a more cost-effective way of collecting tax on low-value products, lowering the threshold wouldn’t make sense from a revenue collection point of view.”
eBay predicted that foreign sellers would ditch its website and sell on other “dark parts” of the web in order to dodge the tax. Dr Leigh agreed this was a risk.
“Anything that sees Australian shoppers move away from these trusted outlets could potentially increase people’s vulnerability to scams,” he said.
“Many Australians will have bought products through Amazon, eBay, AliExpress and got the benefits that go with using these big platforms, so we need to make sure people continue using those.”