Retailers hit panic button as online sales boom

A group of Australia's largest retailers has called on the Federal Government to amend its taxation laws in the wake of strengthening competition from online merchants hosted overseas.

In an open letter to the Government [PDF], local retailers complained that foreign etailers enjoyed  GST-free sales on goods and services sold for less than $1000, whilst local bricks and mortar outlets were taxed for a purchase of the same value.

The retailers called for the Government to lower the GST-free threshold on goods and services purchased online from overseas.

This would "create a level playing field where the same rules apply to everyone," the letter said.

"That means everyone is exempt from GST and duty charges for purchases less than $1000 - or everyone has to pay GST and duty."

Led by Myer, the signatories to the letter included David Jones, technology giant Harvey Norman and book retailers Angus and Robertson and Borders. In total, the complainants represented 2,211 retail stores, employing more than 76,000 Australians.

Bricks and mortar retailers have struggled as the Australian dollar has climbed against the U.S. dollar and Euro, with more and more sales heading direct to manufacturers or retailers based overseas.

Retailers have also struggled against restrictions on trading hours imposed by State Governments in conjunction with trade unions.

In South Australia, for example, stores were closed for five days during the Christmas and New Year period, much to the angst of both industry [PDF] and shoppers.

The Myer-led protest letter also noted that the rise of the smartphone had led to huge growth in online retail at the expense of physical stores.

"We agree with our customers that online retailing is a wonderful convenience that is here to stay. We currently offer our customers online services and we want to offer more, but we are disadvantaged by an Australian tax regime that offers overseas businesses a better deal to the detriment of Australian retailers and consumers who shop locally," the letter said.

Electronic Frontiers Australia stepped into the debate today to ask that the Government not pander to the retailers' lobby group without canvassing the opinion of all stakeholders - especially consumers.

Any move to reduce the GST-free threshold "would hurt Australian internet users and consumers," said EFA Chair Colin Jacobs. "Until a solid case is made that the economic benefits would outweigh the advantages in choice, price and convenience to shoppers, we don't think the status quo should be changed.

"The rise in online commerce has significant benefits for Australians, and will only become more important," added Jacobs. "With the NBN on the way, any changes targeted specifically at hindering online shopping should only occur after a lot more study and consultation."