GST'ing online purchases discussion

[Mal]

Only if you (incorrectly) believe that people only shop based on price. While some do, that's not an accurate or valid statement to apply to everyone.
<snip>
By applying the tax there, the difference will be smaller. Even if still slightly cheaper offshore, some still prefer shopping locally for the:
- quicker availability
- less risk of damage in transit
- the biggie, it is generally more straightforward getting a refund or dealing with any issues.

I bought a portable HDD tonight. Retail cost from OfficeWorks was $30 more than I could have bought it for if I chose to shop around (or get them to Pricematch). DSE was another $20 dearer. Strangely enough, I didn't check Harvey Norman... I wonder why? Perhaps I could have seen their empty store and staff who were lamenting the stupid comments from the chain's founder!

Of course I checked Amazon, and could have bought the item for similar prices to the cheaper retail in Australia.

The service in OW was pathetic. I was tempted to throw the empty carton over the counter and buy it online. Instead, I stuck with the purchase.

So why did I purchase it? I wanted it tonight. I could have paid $30 less to buy if I chose to chase the cheaper price, I could have haggled with DSE or OW to match the cheaper price I found.

But this is a rare exception for me. Yes everyone is not the same (hence why people choose to use very expensive options for the same items as other option), but this set of people is not infinite - and retailers need to realise that.

Immediate demand is quite limited. How often do you see mini-bar items used in hotels? (as a very good example of cost vs convenience)

Oh - and as been discussed in this thread, buying locally does not increase the after sales service by any stretch of the imagination ... Certain online stores have excelled in this type of customer care (eg Amazon, try reporting a lost package - and they bend over backwards to help)), in general terms, once you walk out of a store in Australia you are on your own.

 

[medhead]

He did not say in that quote the tax was the entirety of the difference. Nor did he claim there that prices will be the same just by adding in GST. I find some are exaggerating his claims seemingly to demonise him...

By applying the tax there, the difference will be smaller. Even if still slightly cheaper offshore, some still prefer shopping locally for the:
- quicker availability
- less risk of damage in transit
- the biggie, it is generally more straightforward getting a refund or dealing with any issues.

Actually the whole basis of the retailers campaign is that online prices are cheaper because GST is not charged on purchases less than $1000. That people shop on line because they are not paying the GST on purchases less than $1000. Therefore the implication of any example he gives is that adding GST will make the prices the same or at least very similar. Yet even his own example disproves the basis of the retailers position. So there is no need to exaggerate anything, they have demonised themselves nicely without any help.

Actually the GST can only be applied when it crosses the border, so it is not going to impact on prices there. Also the difference in the guitar example drops to 23% still a significant reduction.

As for some still preferring to shop local, I would say it is more than some. A few estimate have been made that estimate on line shopping at 1% to 5% (something, total retail spend?). So local retail is still getting at least 95% of business and that is just another reason while the retailers look stupid over this whole thing.

 

[Sprucegoose]

They have handled this poorly. Best to say nothing. It has sparked an Greater interest in the practice and Harvey's rantings have no political support in any case!!

Imagine going to an election with this hanging over your head!!

The retailers have had ample time to get innovative IMHO.

 

[docjames]

Wonder if this will be one of the classic case studies in MBA classes in a couple of years of how a once mighty business failed to realise that its business plan is no longer relevant?

Would be a great one for the Gruen Transfer

 

[cove]

Gee docjames you are making me think about shorting Harvey Norman shares even though they are about one cent off their yearly low.
Is he still taking 18% off all his suppliers invoices before the poor old franchisees get to touch the product?
I dont see that rate of slicing the cake working too well with internet deliveries working.
The only issue I see as the hindrance is the difficulty of returning products from overseas bought over the internet when you make a mistake.

 

[oz_mark]

As for some still preferring to shop local, I would say it is more than some. A few estimate have been made that estimate on line shopping at 1% to 5% (something, total retail spend?).

With a bit of luck, the productivity commission report might go someway to getting a handle on how big the problem is. At the moment, the figures seem a bit ribbery.

 

[medhead]

With a bit of luck, the productivity commission report might go someway to getting a handle on how big the problem is. At the moment, the figures seem a bit ribbery.

I agree it is hard to trust the numbers. One of the estimates I read in the AFR, I think it was from Merrill Lynch, was 3% to 5%. Someone else here mentioned an estimate of 1%. Who knows, but it'll be interesting to see how it pans out.

 

[Mal]

With a bit of luck, the productivity commission report might go someway to getting a handle on how big the problem is. At the moment, the figures seem a bit ribbery.

How would they be able to work it out? The only way I can conceive it might be possible is to use credit card data - but that is flawed. Australia post could indicate number of packages - but that's flawed too. Customs could indicate similar inspection figures - but again flawed.

So where would they pluck the numbers from?

 

[medhead]

How would they be able to work it out? The only way I can conceive it might be possible is to use credit card data - but that is flawed. Australia post could indicate number of packages - but that's flawed too. Customs could indicate similar inspection figures - but again flawed.

So where would they pluck the numbers from?

I would think that customs clearance data would be a start. Every package has is most likely dealt with by a clearance agent. I'm sure customs would require declaration of the values of each package. Should be easy to compare that info to retail sales figures or similar.

 

[Mal]

I would think that customs clearance data would be a start. Every package has is most likely dealt with by a clearance agent. I'm sure customs would require declaration of the values of each package. Should be easy to compare that info to retail sales figures or similar.

A very high percentage of internet purchases arrive via Australia Post - Ebay (in particular), Amazon for a large number of items, Book Depository etc, and the list goes on.

I doubt this is in a manifest anywhere.

 

[anat0l]

A very high percentage of internet purchases arrive via Australia Post - Ebay (in particular), Amazon for a large number of items, Book Depository etc, and the list goes on.

I doubt this is in a manifest anywhere.

I thought Australia Post items were subjected to customs and DG clearance?

In any case, we know our government has a fine reputation of adding layers of red tape on top. If they really wanted to make sure every single thing imported into the country (whether it be by container or by post) is inspected, itemised and qualified, they well can do it, and tax payers or one party will have to foot the bill to facilitate that process.

The counterargument would be whether such "policing" - whether morally unreasonable or otherwise - is constitutionally sound as well as not overly restrictive of the free trade ideal.

 

[oz_mark]

In any case, we know our government has a fine reputation of adding layers of red tape on top. If they really wanted to make sure every single thing imported into the country (whether it be by container or by post) is inspected, itemised and qualified, they well can do it, and tax payers or one party will have to foot the bill to facilitate that process.

If the tax office had thought this was a worthwhile idea, you can be sure that they already would have suggested it. The problem is that it is not an efficient use of resources.

 

[medhead]

A very high percentage of internet purchases arrive via Australia Post - Ebay (in particular), Amazon for a large number of items, Book Depository etc, and the list goes on.

I doubt this is in a manifest anywhere.

Everything that crosses the border is subject to customs clearance. Even if thy don't itemise goods they will know the number of packages and the value of those packages.

.
The counterargument would be whether such "policing" - whether morally unreasonable or otherwise - is constitutionally sound as well as not overly restrictive of the free trade ideal.

Import clearance and such like doesn't actually restrict free trade. Similarly I'm not sure how it could be unconstitutional either.

 

[Julesmac]

I love my local bookseller and purchase there often. BUT - A large format, heavy book - Taschen's 'New York' $100 in Melbourne. Book Depository UK - $49.00 & no postage costs. Expect in ten working days. A no-brainer!:-|

 

[Mal]

Everything that crosses the border is subject to customs clearance. Even if thy don't itemise goods they will know the number of packages and the value of those packages.

I really can't see that Australia Post (and customs) are able to track *everything* that turns up via mail. Yes, they know weight, but not individual package numbers. Look at (for example) Border Security when they show the Australia Post inspection areas. A Bag of parcels is thrown onto a belt, it is x-rayed, then continues it's journey. Cursory glances are done at Customs Declarations to see what should be more closely inspected.

Anyways, I'm probably off on a tangent, so will leave it at that.

 

[cove]

Gerry Harvey is now as popular in our household as a pork chop is in Jerusalem.
We can do without anymore of his BS!

 

[medhead]

I really can't see that Australia Post (and customs) are able to track *everything* that turns up via mail. Yes, they know weight, but not individual package numbers. Look at (for example) Border Security when they show the Australia Post inspection areas. A Bag of parcels is thrown onto a belt, it is x-rayed, then continues it's journey. Cursory glances are done at Customs Declarations to see what should be more closely inspected.

Anyways, I'm probably off on a tangent, so will leave it at that.

The imports are documented that is a separate issue to tracking and inspecting packages. As per this thread importation is a taxation issue, all packages valued over $1000 have pay GST. Hence every package that arrives at the border has to have a declared value and be accompanied by certain documentation. I'll look for some links when I get back on a computer.

BTW I would guess that australia post is nothing more than a local delivery agent and hence thy would know nothing about this stuff.

 

[samiam]

Everything that crosses the border is subject to customs clearance. Even if thy don't itemise goods they will know the number of packages and the value of those packages.

I'm guessing I've purchased a couple of dozen e-books via Amazon and elsewhere- as these do not physically enter the country, they might be harder to track. The same might apply for some software, digital music, etc

 

[Hvr]

If the government decided to collect GST from Internet sales then surely the way to go would be to see where money goes from bank accounts and credit cards.

Much easier than tracking goods into the country and catches services as well.

Given they apparently aren't interested I'd reckon it has been considered and not found to be worthwhile.

 

[medhead]

If the government decided to collect GST from Internet sales then surely the way to go would be to see where money goes from bank accounts and credit cards.

Much easier than tracking goods into the country and catches services as well.

Given they apparently aren't interested I'd reckon it has been considered and not found to be worthwhile.

The government does already collect GST from Internet sales, over $1000.
To be less flippant. I'm not sure what the best system is for collecting tax. But the thing is there is already a system in place for taxing physical imports into Australia. What has been proposed is removing an existing GST exemption. It seems that collecting this tax would be extremely expensive. I'm not sure it would be wise to create a new system for assessing and collecting the GST of low value imports.

BTW my comments are only about physical goods not e-goods

I'll look for some links when I get back on a computer.

BTW I would guess that australia post is nothing more than a local delivery agent and hence thy would know nothing about this stuff.

Well I'm at a computer and have found this link. http://www.customs.gov.au/site/page5653.asp

For a complex topic it is probably a decent summary for internation post. I was wrong about Australia Post and the import declarations are only required for assessed or declared values over $1000. I should have checked before making stuff up.

However, the basic thing is that all packages arriving in Australia will have a declared or assessed value. So for the purpose of taxation only (not prohibited imports or AQIS restrictions) then there should be a decent snapshot of the value of goods imported and the number of packages. This would be a starting point to working out the value of online purchases, compared to bricks and mortar retail. I'm not saying it will be a straight forward calculation but the information should be there to make a half way decent estimate.