The advantage enjoyed by online retailers based overseas over bricks and mortar stores insofar as Australian consumers are concerned may soon be removed. A plan by the federal government to collect the general sales tax (GST) for purchases abroad may just level the playing field for both kinds of retailers.
REUTERS/Mick Tsikas Pedestrians walk past a David Jones department store in central Melbourne
Reports said that the plan to lower the GST exemption from the current $1,000 is the result of a review made by the Gillard government in response to complaints of local retailers that their foreign counterparts enjoy an advantage due to the GST-free high threshold.
To worsen the situation for Australian retailers, the country's currency continues to strengthen, causing Aussies to prefer to buy products overseas which are cheaper due to their GST-exempt status.
Major Australian retailers such as Myer, David Jones and Harvey Norman are among those pushing for a lower GST exemption to as little as $30.
Australian Retailers Association Executive Director Russell Zimmerman favoured the planned changes, which is expected to save jobs in the local retail industry and add $1.6 billion to government coffers.
However, there are concerns that the GST may cause consumers to hold on to their wallets just when Aussies are parting with their hard-earned money. Some consumers clarified that they prefer to buy overseas from online retailers not to escape paying the GST but for convenience and lower cost of goods.