[LINK] Kogan on Online Retail....

[Frank O'Connor]

OK, Leaving aside the monkey brain issue, it comes down to three 
objections to taxing on low value/low volume imports:

1. It costs more than it raises in revenue. Doesn't make a lot of 
sense to do this ... as the ATO pointed out.

2. If one passes on the costs (as Customs and the ATO would probably 
be bound to do if the government caved to the retailers demands) the 
cost would be far more than its worth. Remember the retailer doesn't 
pay GST on their bulk imports. (They pay at the POS, and claim 
REFUNDS as credits for anything before same.) Customs would probably 
charge say $50 to $100 per article (presumably billed and collected 
at the Post Office ... taking up more of the Post Office's time and 
resources as well) in addition to the GST, and it would probably 
involve much to and fro'ing of paperwork and a tortuous long process 
to clear goods before you got your hands on them. For goods about 
$900 to $1000 (or if the inordinate markups in the cost of like 
product in Australia continued), it would probably still be 
economically worth while, but for goods of lesser value ... forget it.

3. The ONLY beneficiaries of these charges and process would be our 
uncompetitive retailers, who could continue to live in their 
uncompetitive Nirvana, raking in their huge margins and holding a 
geographically isolated population captive. In other words ... it 
would be an uncompetitive industry protection plan for the retailers 
out dated business high margin model. Blacksmith's never had this 
protection in the turn of the last century ... so why should another 
dying business model/service get it now.

In other words ... the retailers would have put charges and process 
in the way of their competitors, and the situation would become so 
tortuous that buying from on-line retailers overseas would simply not 
be viable for people. This is what the current kerfuffle is about. 
Not the 10% GST ... which is an irrelevance. It's about putting in 
place processes and charges that make single e-commerce transactions 
non-viable and/or painful.

For the government this situation would be revenue neutral ... 
although the bureaucracy would get an expansion happening in their 
empire ... they would simply recover the costs of the exercise. For 
the retailers, joy is their's .. competitors has been wiped out. 
(This form of capitalism isn't really about competition ... it's 
about wiping more efficient competition out, using means other than 
efficiency) And for the customers ... well, we'd be back 
geographically trapped in the hands of the retailers.

That said, because of the Internet we'd know we were being ripped 
off, and would be getting progressively angrier and more resentful 
with those who did this to us ... government and the retailers.

Everytime we bitch about cost/product/job loss/industry closure or 
whatever they invariably throw globalisation in our faces ... well 
now the shoe is on the other foot. The retailers must adapt or 
perish. They must add value, rather than subtract it ... or try get 
the government to subtract it from their competitors  on their behalf 
(which is what this whole exercise is about).

Job losses? Hey, disbursed goods delivery for example is way more 
labour intensive than when you and I go to the centralised stores and 
do the work for them... and a heap of other services and industries 
will benefit from an e-commerce rather than supermarket/traditional 
retail model. And hey, if less land was taken up by unsightly 
shopping malls and retail outlets ... maybe land values would go down 
to reasonable levels.  :)

At 11:19 AM +1100 on 10/1/11 you wrote:
>There seems to me to be a general conflation of two issues in this
>discussion (here and elsewhere) between the performance of local
>retailers and the economic case for GST on international purchases. 
>
>I don't have much to add to the discussion of the performance of local
>retailers.
>
>As regards GST: it is a consumption tax applied to sales to the final
>consumer.  I can't see a good reason for Australia to forgo tax revenues
>on consumption that is purchased from overseas, particularly as this is
>likely to increase over time.  I can't see any policy problem with this.
>Can anyone?
>
>There is, however, a practical problem in getting a collection process
>that functions smoothly and effectively.  I'd guess that can be sorted
>if the financial transfer is used as a tax point but I wouldn't know.  I
>don't think 10% GST will stop people from purchasing goods at 50% of the
>local price overseas, although it will swing marginal cases a bit.  I
>bet Harvey Norman wants in addition to GST on foreign purchases, the
>most obtuse and difficult tax collection scheme that can possibly be
>constructed :)  
>
>(There is a good economic reason for slanting taxation towards
>consumption rather than productive investment.  OTOH flat rate taxes are
>regressive since they are impact the poor to a greater relative degree,
>but I think this can and should be mitigated elsewhere.)
>
>Interwoven with the above there's also a third irrational "monkey brain"
>issue of taxation in general: no one wants to pay tax.  However, we all
>want to live in the amenity of high tax countries and no one wants to
>move to places where tax rates are genuinely low, eg, Somalia. Enough
>said on that one. :)
>
>- Jim
>
>
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