Internet retail giant eBay has threatened to block Australians from accessing its global marketplace if the government pushes ahead with a new 10 per cent tax on foreign imports.
In a submission to a parliamentary committee on April 10, CEO Jooman Park slammed as “complex, inconsistent and unworkable” the proposal to require almost all overseas websites to charge GST on everything they sell into Australia.
“Regrettably, the government’s legislation may force eBay to prevent Australians from buying from foreign sellers,” Mr Park wrote.
“This appears to be the most likely outcome at present.”
Under the legislation, which was supposed to be voted on this year but has instead been referred to a Senate committee, the prices of clothes, shoes and other popular online purchases from overseas would rise by at least 10 per cent, if not more.
The only exception would be if an online seller exports less than $75,000 worth of physical goods into Australia in a year.
But the legislation will deem eBay to be a ‘seller’. As eBay easily exceeds the $75,000 threshold, every foreigner exporting to Australia through the website will have to charge the 10 per cent GST.
Mr Park said complying with the new law could cost eBay more than shutting down all auctions and direct sales to Australia.
If the company makes good on its threat, Australian eBay users would be allowed to bid and buy from other Australians, but not from the website’s much bigger global marketplace.
“The proposed legislation is complex, inconsistent, unworkable and will harm Australian consumers in many ways,” Mr Park wrote.
“It is open to abuse by foreign companies, it exposes Australians to the risk of double taxation, it will reduce price competition and choice for all Australians who shop online, and it will drive online trade away from trusted, cooperating online marketplaces to the dark parts of [the] Internet.”
Currently, GST is only charged on foreign packages if they exceed $1000 in value. Dropping the threshold to $0 was the brainchild of former treasurer Joe Hockey.
Australian retailers have welcomed the idea, but plenty of other groups, including consumer advocacy group CHOICE, have pointed out it may not raise more revenue than it costs to collect.
Another widespread concern is that small, foreign sellers will dodge the tax by ditching eBay and selling on less reputable websites that have no qualms about breaking the law.
If eBay, Amazon and other sites don’t block Australians, they may impose much more than a 10 per cent surcharge to cover the cost of dramatically overhauling their Australian websites, CHOICE told the Senate committee in its submission.
Ebay gave the example of online bids, warning “it is unlikely eBay auction listings would ever be able to accommodate this requirement”.
For example, would Australians be required to add 10 per cent to their bids? And would this additional 10 per cent be stripped out when it came to deciding a winner?
Adding to the complexity, the government wants eBay to charge GST on goods valued below $1000 the moment the buyer pays. But for goods above $1000, Customs will continue to charge GST when the package enters Australia.
This could result in double taxation, eBay warned.
“Separate goods in one box would appear to attract both tax treatments,” Mr Park wrote.
Fashion retailer ASOS echoed eBay’s concerns, while Amazon said it supported the measure, just not the collection method. It said shipping companies should charge the tax.
Australian shoppers should not confuse this proposal with the so-called ‘Netflix tax’ legislated last year, which from July 1 will impose the GST on all foreign digital imports (such as Netflix subscriptions).