GST'ing online purchases discussion

[Postcode]

It seems the general public is seeing right through Harvey and his cartel's whinging and treating the Australian public as private money trees.

Retailers declare war on online shopping | News.com.au

I really think he has shot himself in his foot by making people aware of the savings and often better choice the public has by buying online and overseas. He and others may regret they even started this selfish campaign.

 

[anat0l]

I got an idea for Harvey Norman and other retailers.

Go completely online. Sack all your sales staff, save gazillions, and go toe-to-toe with online retailers. They might even be able to go cheaper than the other online retailers.


What is weird is that sometimes the converse strategy happens. For example, Dell maintained an online only presence, but now has small stores around the place. Admittedly, it costs the same to buy a Dell computer in store or online, but why did they feel it strategically advantageous to set up a human presence? Don't forget that the latter move costs a non-trivial amount of money, and one has to wonder how effective the salespeople at Dell stands are (skills, training etc.).

 

[medhead]

As a confirmed coke addict, mostly of the zero variety I recently was paying 2,00€ for a 500mL bottle at a vending machine, and around 1.20€ at a supermarket in France. A 330mL can for around 1€. Considerably less expensive than here. Today 1€ is about AUD $1.30.

I didn't say it wasn't cheaper in a supermarket but the coke price was mentioned in relation to the Sydney Fish Market, which I would guess would be a food court type vendor not supermarket.

 

[anat0l]

As a bit of an aside:

There's always an interesting "fall back" on all these stories that involve big companies and money, which is the tiff about local jobs, i.e. big companies rolleyes: not small ones, or all of them) employ many people in several disciplines. These are local people, in the nation. (We saw the mining companies push the jobs argument really, really hard when they were advertising against the RSPT).

Assuming this faux juggernaut doesn't actually do anything and we remain with status quo, if big retailers should drop their prices in response to online retailers then their profits drop too. Since profits can't really go down without a good reason (since companies have shareholders to answer to, and it's the law), it's not a matter of 'if' retailers can maintain the same number of staff or that they 'should' retain the same number of staff, but they will sack people and/or close branches; even if they don't, I believe they are well and truly going to at least arm themselves by taking those two action cards out of the proverbial deck.

So the question is: do we care about the jobs of people who work in retail or simply that they are subjects in an unfortunately inefficient system?

 

[medhead]

As a bit of an aside:

There's always an interesting "fall back" on all these stories that involve big companies and money, which is the tiff about local jobs, i.e. big companies rolleyes: not small ones, or all of them) employ many people in several disciplines. These are local people, in the nation. (We saw the mining companies push the jobs argument really, really hard when they were advertising against the RSPT).

I don't really see this as an aside. The RSPT argument was just as daft as the online shopping argument. It might have shift the development cost curve slightly but there was no way that australian resources wouldn't get developed in the long run. (well that is an aside)

The interesting point, for me, now that you mention the RSPT, is why the public aren't responding in the same way to the GST thing by the retailers.

Assuming this faux juggernaut doesn't actually do anything and we remain with status quo, if big retailers should drop their prices in response to online retailers then their profits drop too. Since profits can't really go down without a good reason (since companies have shareholders to answer to, and it's the law),

I assume you don't mean it's the law in a literal way, as in it is a real legal requirement for profits to increase. Profits can go down and the company is not required to give a good reason at all, the question is whether shareholders will accept the reason. I've seen a few examples of profits going down and shareholders accepting reasons that didn't really get into the underlying issues and the shareholders didn't ask the questions and neither did any financial regulators.

So the question is: do we care about the jobs of people who work in retail or simply that they are subjects in an unfortunately inefficient system?

I think we care about Australian jobs, it is just that the retailers have a fundamentally flawed position and it seems that the public isn't buying what they're selling (boom, boom). Hard then to sack people without public support not to mention the damage already poor service levels.

 

[oz_mark]

WHo would have thought. The big boys that have squashed the little players, have tightened the screws on suppliers, have taken service levels downwards, are now running to the government to protect them from those nasty overseas online retailers.

Just because Gerry Harvey is anti online trading, and couldn't make a go of it (and refer to this article from 2 years ago to get his views on it: JB Hi-Fi chief backs Gerry Harvey; online retailing) Here's a quote:

Online people do not make any money. The whole world was conned with online retailing,” Harvey said. “People say I’m a dinosaur, and I’ve had people coming to me with sites and saying, ‘Oh, look at this, they have 10,000 or 20,000 hits!’ – but it’s a con, a complete con.”

So what happened - looks like the major retailers (read Harvey Norman) made a strategice blunder and are now looking for the government to protect it. The fact that they have failed invest in the online sector, while others have show leadership and innovation, and now complain, smacks of sour grapes.

Quite simply the legacy retailers don't get why people are shopping online (price is one, range of goods is another, and service can strangely be better). Even then, online sales is by all accounts only a small fraction of total retail expenditure.

The music and film industry has struggled with the rise of the internet for a number of years, now it looks like it is the turn of the retail industry. Give the consumers what they want, and they will come.

 

[Mal]

Stupid comments like those from Mr Harvey et al is enough for me to "try" and never purchase from those mentioned stores. I'll try my damn hardest to have no discretionary spending at those stores, as I can always shop overseas or online anyway.

Here's the strange thing. Gerry Harvey is a shrewd businessman. (Not sure how many corporate stores there are in the chain ... are there any?), but there is ZERO chance that they don't buy from the cheapest wholesaler that can give them the goods, the service and which has the correct line items.

Now he turns around and complains that customers are shrewd shoppers!?

The other companies lining up are also a pack of whingers. Let's see - some of the names are very interesting (in the clothing type sectors)... MmmKay. They're most likely even worse than Gerry. 99% of their stuff appears to come from China, and I am sure they are getting amazing deals based on their buying power.

Their spokesman is Solomon Lew - Aah yes! That character... His investment companies own quite a few clothing type stores, as well as being involved in many facets of import and distribution. Again, I bet he is getting very good deals for items.

BTW - Can anyone find a website for this "Retail Coalition"? Or are they a bunch of technophobes who can't use computers?

 

[dk4]

...looks like the major retailers (read Harvey Norman) made a strategice blunder and are now looking for the government to protect it. The fact that they have failed invest in the online sector...

Perhaps as a geographic-territory-based franchiser, Harvey's current business model is not conducive to online retailing?

 

[odysseus]

WHo would have thought. The big boys that have squashed the little players, have tightened the screws on suppliers, have taken service levels downwards, are now running to the government to protect them from those nasty overseas online retailers.

Just because Gerry Harvey is anti online trading, and couldn't make a go of it (and refer to this article from 2 years ago to get his views on it: JB Hi-Fi chief backs Gerry Harvey; online retailing) Here's a quote:

Although I'm not a supporter of his stance (although understand it - it's the rational thing business does now; the banks are doing similar putting forward their perspective on a different matter at the moment), I wouldn't suggest a 2 year old article to be an accurate statement of his view now. Things change a lot in 2 years - moreover the currency factor has substantially changed the value proposition in that time.

 

[oz_mark]

Although I'm not a supporter of his stance (although understand it - it's the rational thing business does now; the banks are doing similar putting forward their perspective on a different matter at the moment), I wouldn't suggest a 2 year old article to be an accurate statement of his view now. Things change a lot in 2 years - moreover the currency factor has substantially changed the value proposition in that time.

My point is that he made a strategic blunder in dismissing the threat that online retailing posed. Clearly he has changed his view, as time has proven his dismissivness to be misplaced. Going running to the government for help from his own mistakes is where I object.

 

[serfty]

Thinking about this more ... and I know it's latish ... but maybe this 'consortium' are hoping that any penalty for importing will be more than simple GST.

I believe that currently the Government deems the "compliance" cost of garnering GST on such overseas purchases (of up to $1K) would generally be more than that collected - so they do not bother.

Maybe the 'consortium' are hoping the government start charging the purchaser GST as well as a "compliance" fee for each import - to 'recoup' the Governments costs in processing/auditing such payment thereby making it less worthwhile to purchases from overseas.

Also, the bookwork for such compliance could be made onerous for the purchaser as well.

Hmmm ....

 

[Alanslegal]

Maybe the 'consortium' are hoping the government start charging the purchaser GST as well as a "compliance" fee for each import - to 'recoup' the Governments costs in processing/auditing such payment thereby making it less worthwhile to purchases from overseas.

Definitely an interesting angle there.

However my sceptical side will say this will never get up. Everything entering our shores would appear to be deemed an 'import' and imagine the tens (if not hundreds) of thousands of ordinary australians being unexpectedly stung with GST (plus a compliance/processing-type fee) for those items. Take it even further, and imagine if it's a birthday present that a family member has sent half way around the world only to be hit with a lousy $20 GST and processing fee. It would leave a very sour taste in that affected persons mouth - possibly leading to all sorts of things like a loss of vote at the next election.

 

[medhead]

Definitely an interesting angle there.

However my sceptical side will say this will never get up. Everything entering our shores would appear to be deemed an 'import' and imagine the tens (if not hundreds) of thousands of ordinary australians being unexpectedly stung with GST (plus a compliance/processing-type fee) for those items. Take it even further, and imagine if it's a birthday present that a family member has sent half way around the world only to be hit with a lousy $20 GST and processing fee. It would leave a very sour taste in that affected persons mouth - possibly leading to all sorts of things like a loss of vote at the next election.

Ah but there's the rub the retailers only want the government to target online businesses. Not the ordinary man in the street importing things in private. Clearly that would be stupidly hard to police and almost impossible to enforce on offshore companies. Another reason the retailers are wasting their time, IMO.

 

[Rebekkap]

Thinking about this more ... and I know it's latish ... but maybe this 'consortium' are hoping that any penalty for importing will be more than simple GST.

I believe that currently the Government deems the "compliance" cost of garnering GST on such overseas purchases (of up to $1K) would generally be more than that collected - so they do not bother.

Maybe the 'consortium' are hoping the government start charging the purchaser GST as well as a "compliance" fee for each import - to 'recoup' the Governments costs in processing/auditing such payment thereby making it less worthwhile to purchases from overseas.

Also, the bookwork for such compliance could be made onerous for the purchaser as well.

Hmmm ....

Yeah, but the thing is, they get all their stock by importing. I don't think they want that, and their book work, made even more onerous.

 

[knasty]

A quick international example from UK Royal Mail website. Not only is the VAT threshold much lower, but Royal Mail now impose a fee for the administration of VAT collection/payment to HMRC. Our $1000 threshold for GST on imports is derived from Sch 4 of the Customs Tariff Act 1995 ie. the same concession which applies to inbound passengers and hence duty free shops.


Receiving mail from abroad



All mail that enter the United Kingdom may be examined by customs, but
normally letters, postcards and packets containing only documents or similar
forms of correspondence are excluded.

If you are receiving a package from overseas (unless it’s from another EU Country), please be aware that it may incur customs charges. Any package assessed by HM Revenue and customs as being liable for customs charges will also incur a Royal Mail handling fee of £8.

Any goods imported into the UK over the value of £18 are liable to import VAT. Gifts between private individuals over the value of £40 are also liable for VAT. Goods and gifts over these values may also be liable for customs duty. You no longer have to pay customs duty for goods up to the value of £135, however you will still be required to pay import VAT and excise duty where
applicable

 

[oz_mark]

Perhaps as a geographic-territory-based franchiser, Harvey's current business model is not conducive to online retailing?

WHile this is probably true, the fact is that there is evidence from other industries that trying to protect your legacy business model just lets in a new style of competitor.

 

[Mal]

Quite a few smaller online places I buy from overseas mark the Customs label as "present", and a value of $1. This is probably illegal, but Customs doesn't have the time, resources or care to chase it up. Where are they going to get resources from to actually start levying Customs duties on smallish items?

 

[serfty]

...Where are they going to get resources from to actually start levying Customs duties on smallish items?

... from the purchaser? :shock:

 

[kpc]

good article from SMH here:

It almost never ceases to amaze how otherwise clever business people can get the politics of the moment completely wrong - and end up worse off than when they started.
When billionaires start bleating in ''open letters'' about the need for the playing field to be levelled up, no matter how strong their case, you really have to ask what they were thinking or drinking.
Driving their Bentleys off Sydney Harbour Bridge is possibly the only thing that could cause them more ''brand'' damage than their claims that the main reason behind the retailing malaise is that once-captive customers are avoiding goods and services tax by hopping online rather than in-store.

Billionaire retailers cop brand damage

 

[guybaxy]

Its a very weak to target online shopping through the non collection of GST.

Why doesnt't Gerry Harvey try to assist the Federal Government police the non payment of GST by smal retailers? He could strart by going to Market City in Chinatown and find out if anyone selling goods < $1000 are accountig the GST. What about small restaurants who charge you GST and never actually pay any in their BAS due to 'cash sales'. It would be masssive. When the GST came in 1 July 2000 those small retailers just had a 10% increase in their revenue. Their costs (rent and processed food would have increased a bit) but given their personal income tax cuts they would have been better off.