Proposed legislation that would force eBay and other international online marketplace operators to collect GST on low-value purchases by Australians is “complex, inconsistent, unworkable and will harm Australian consumers in many ways”, the company’s local managing director has argued.
In a submission to a Senate inquiry scrutinising the Treasury Laws Amendment (GST Low Value Goods) Bill 2017, eBay’s Jooman Park wrote that if passed the changes to tax law “may force eBay to prevent Australians from buying from foreign sellers”.
Currently, GST is not payable on goods that cost less than $1000 purchased by individuals and imported into Australia. The government bill, announced in the 2016-17 budget, is expected to boost revenue by $300 million over three years by eliminating the zero GST threshold.
The bill to close the sub-$1000 GST ‘loophole’ follows government efforts to tax digital goods purchased from overseas suppliers and crack down on profit-shifting.
Under the proposed legislation, the operator of an “electronic distribution platform” will be treated as the supplier of low value goods, if the platform is used to purchase the goods — capturing companies like eBay.
If eBay blocks Australian consumers from its online auction service, “No tax would be paid to Australia and none would be owed,” Park wrote.
“It would raise no revenue, deny Australians access to choice and lessen price competition. This solution would not even represent a win for bricks and mortar retailers, because Australians would still find ways to buy online. They would do so direct via dot.coms without paying GST and they would lose the confidence they current enjoy buying from eBay with the advantage of its trusted seller ratings. This appears to be the most likely outcome at present.”
As an alternative, eBay has argued that the government could work with logistics companies to collect GST on imported goods.
“A simpler alternative for an island nation is to work with the logistics companies,” Park wrote.
“All parcels arrive at a small number of Customs points, via a small number of international logistics companies, one of which is government-owned. These companies can require buyers to declare whether a good is new and to nominate a value of the good as part of the pricing of parcel delivery to Australia.”
A submission from Amazon to the inquiry said that while it supported reducing the GST threshold to zero, like eBay it did not support the proposed collection model. Amazon said that it too supported a logistics-based model. A joint submission by the eBay, Alibaba Group and Etsy also advocated such a model.