REPORT: Collecting GST From Online Purchases Will Cost More To Do Than Revenue Made From It

A new report by The Institute of Public Affairs argues the newly proposed GST on online purchases is simply not worth the government’s effort.

At present, goods purchased from overseas worth less than $1000 do not incur the extra 10% in Goods and Services Tax, and the government want to see this lifted.

The report “No to the GST attack”, along with analysis from the Productivity Commission, finds that the compliance costs associated with collecting the GST on low-value imports – less than $1000 – would exceed the actual revenues collected.

Should the new tax be successful businesses, consumers, and the government would have to pay about $1.2 billion just to collect the extra GST revenue, according to the Productivity Commission.

“The costs of collecting taxes is typically not miniscule with a range of bureaucratic and other procedures needing to be put in place to ensure tax collection and enforcement”, the report reads.

“In most scenarios estimated, total collection costs would still exceed additional revenues or generate net efficiency losses for the community.”

Here are the price comparisons of identical goods bought online.

The federal government reopened the debate of Australians paying GST on goods bought from overseas online in December, arguing that it was costing Australian jobs by putting local retailers at a disadvantage with overseas competitors.

While most of the states are on board with imposing the GST on imports, because they are granted its revenue. This new finding may influence them to think otherwise.

Should Prime Minister Tony Abbott go ahead with the new GST it will add to a string of new taxes his government has implemented in the last year – the tobacco excise rate of 12.5%, the budget deficit levy of 2% for high income earners, and the fuel excise indexation arrangements – despite his pre-election promises to not raise taxes.​

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