As treasurer, Scott Morrison was highly critical of Amazon's decision to block Australians from shopping at its US store. As treasurer, Scott Morrison was highly critical of Amazon's decision to block Australians from shopping at its US store.
Finance Finance News ‘Amazon tax’ delivers unexpected windfall for government Updated:

‘Amazon tax’ delivers unexpected windfall for government

Twitter Facebook Reddit Pinterest Email

Australian consumers’ appetite for online shopping has soared, with figures confirming we are spending up larger than ever on overseas websites.

The Australian Tax Office has confirmed to The New Daily that the GST, which is levied on low-value goods bought on foreign websites such as Amazon or Book Depository, had already reaped a staggering $250 million by the end of April.

The figure is more than 3½ times the $70 million the ATO had initially forecast for the entire 2019 financial year.

Implemented in July 2018, the tax forced online retailers to apply the 10 per cent GST to all online purchases being shipped to Australia from overseas.

Colloquially known as the “Amazon tax”, it was introduced after a crusade by local retailers, such as Harvey Norman and David Jones, which argued it was unfair that all of their sales were subject to GST, whether online or in store, while foreign suppliers got off scot-free.

Retail tycoon Gerry Harvey, of Harvey Norman, said the $250 million windfall proved that the GST should have come in 10 years ago when he began agitating for it, and that the long delay had cost Australians dearly.

“Yeah, this is great news, it’s just 10 years too late,” Mr Harvey told The New Daily. “How much have they [the government] squandered by not introducing it earlier?”

If it’s already at $250 million and we’re not even through 2019, then I reckon they’ve lost $3 to $4 billion [over 10 years].’’
Gerry Harvey

Mr Harvey said the tax had been slated for introduction three years ago, but “the online giants” had feverishly lobbied federal politicians to stave off its implementation.

The fact the revenue had blown the ATO’s forecast out of the water also proved that the online retailers’ arguments were baseless.

“Not only was it [the lobbyists’ arguments] absolute horse s—, but Malcolm Turnbull swallowed the horse s—, lock stock and barrel,” he said. “But putting it off …. basically he has cost the Australian economy $300 million in one year.

“You can imagine them not getting it right for one year, but for 10? And remember, 10 years ago, the [Australian] dollar was at $US1.10 and now we’re below US0.70c. Can you imagine what it would be if the dollar was still at $US1.10?”

Mr Harvey said the previous argument that the cost of collection of the GST would outweigh the revenue had also been obliterated by disclosure of the latest figures.

It was never about the 10 per cent

Online retail commentator Colin Barnard said the higher-than-expected figure wasn’t particularly surprising.

Mr Barnard, who works with online advertising company Criteo, said e-commerce sales were expanding and Australia was an attractive target for foreign suppliers looking for more turnover.

Easy-to-ship lines, such as fashion, sports goods and beauty and cosmetics, were becoming increasingly popular among Australia’s online consumers, he added.

“Australian consumers are tech-savvy and digitally aware so they’re an  attractive proposition, to the likes of say an [UK-based clothing retailer] Asos,” Mr Barnard said.

While the appetite of Australian consumers is similar to that in the US and UK, the range and prices available to Australians was not as mature as in other countries.

But the market has seen a boom in overseas players who have helped push the market along significantly, he said.

The ATO may have also overestimated the effect that an extra 10 per cent on the cost of an item would have on turnover.

“While the ATO might have expected a lot of that foreign online business to disappear, a company like Asos can either easily absorb that extra cost or even pass it on to the consumer.

“Some of those bricks-and-mortar retailers who were kicking up a fuss and thought the 10 per cent was the be-all and end-all, but at the end of the day, consumers may have been attracted by other factors such as range, service or delivery.”