Source: web
Australians may expect, to pay a higher Goods and Services Tax when shopping from overseas retailers online. This is in light of consumers benefiting from the threat of the global financial crisis by capitalizing on online shopping advantages.
In Australia, every retailer charges a Goods and Services Tax (or GST). Statistics have found, though, that many savvy Australian shoppers can avoid this by shopping online from companies with overseas bases. This, of course, is not necessarily pleasing to Australian retailers and the government.
As with many growing communities, online shopping in Australia is on the rise. In fact, it is quickly becoming a major trend across the continent.
Online Shopping In Australia
According to recent stats:
- 44% of this increase made online purchases at companies outside of Australia
- 13% increase of online shopping in Australia
- More than $6 billion (AU) will be spent on overseas products (which is close to half of their provided online statistics)
- Total internet market share in Australia is 5.5%
- 12.6% projected increase in market share by 2015
Obviously, online shopping in Australia is on the rise. This is due to the fact that online shopping provides consumers, particularly those in Australia, with access to far more options and often at more affordable prices. Part of this affordability is due to the fact that online retailers are not affected by the Goods and Services Tax (GST) associated with sales from local businesses in Australia, as some statistics suggest:
- According to the Australian Bureau of Statistics, Australian online stores cashed in on $143 billion in sales between 2009 and 2010
- The ANRA proposes that the government reduce the tax-free import threshold from $1000 to $100
- The ANRA also proposes that every online sale of $100 or more, when completed with an overseas company, should be taxed
- Less than 1% of online shoppers report that they shop online to avoid paying the GST associated with home-based retail stores
Online Shopping And The GST
Although most consumers would prefer to avoid additional taxes to any kind of shopping, because of the convenience of e-commerce, it seems almost downright shameful to add another tax to online shopping. This is certainly an issue for fans of online shopping, but truth is, the addition of a GST to online purchases coming from Australia makes a lot of sense. According to Ingrid Just, spokesperson for Choice, an Australian consumer group that is concerned about the ANRA adding taxes to online retail purchases:
While consumers often see the benefit of a strong dollar when they shop online, they’re not seeing it in stores… there needs to be greater efficiencies across the whole supply chain if the consumer is to benefit from the strong dollar, and indeed if the retailers are to compete with the online market.
As a matter of fact, the institution of the GST could be just the thing that local Australian retailers need to regain the business of their local consumers who previously chose to shop out of state simply because of a major price difference. This is becoming more and important as the global financial crisis.
Mark McInnes, CEO of Premier Investments
Customers are really saving off the back of the GFC. They are restoring their savings back to the pre-GFC rates and there is a bit of confidence crisis with everything that has gone on with the foods and carbon tax.
He continues “the positives are low unemployment, good wage growth, heavy investment… in the resource sector in China and beyond and everyone has got a job…The question is, How do you get customers to spend in your store?”
The answer, of course, is that you make your store more enticing than any other store. As long as online retailers in foreign locations are able to charge less for the same products as local establishments, then, it may be very difficult to do this. This is especially true of investors and other forms of support which are looking to streamline profits during a persistent recession. As the Global Financial Crisis continues, then, it is very uncertain how local businesses in Australia can compete with far less expensive, and perhaps more well-executed, business relationships.
Australian retailers should rejoice at the new GST policy that requires all Australian residents to pay an additional tax on imported goods and services. This should even the playing field for local businesses who have been losing out to overseas competition.
