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The power of industry associations has added $250 million in GST to the budget

COSBOA today noted the announcement by the Australian Tax Office that revenue from changes to collection of GST on purchases made from overseas by Australian consumers has added $250m to the national budget in its first 9 months of operation, up from the $70m that was budgeted to be collected annually.

As background: the Federal Parliament passed a law in 2017 that extended the goods and services tax (GST) to low value imports of physical goods imported by consumers from 1 July 2018. Prior to this legislation GST was only charged on overseas purchases made from within Australia which were over $1,000. This gave overseas businesses, including giants like Amazon, an unfair advantage in competition and also created a red tape advantage for non-Australian businesses.

Peter Strong, CEO of COSBOA, stated today “this shows once again that governments and policy makers need to listen more closely to industry associations and not ignore our opinions. For years groups such as our member organisation, the Australian Booksellers Association, argued, coherently and logically, for changes to the Low Value Threshold GST legislation. The association argued that GST could easily be collected by the ATO as part of what it normally does for purchases made within Australia. Vested or misinformed groups such as Choice argued that it was too hard and too difficult, while others argued that we should only collect GST on purchases above $25 but not below. Others just argued that they knew best without any supporting information. As always, we in small business have a better understanding of the real world than those who live in text books.”

COSBOA and its members know that the extra money collected will contribute to a budget surplus as well as to infrastructure, health, defense and education. The costs of collecting the extra government income have been no more than the costs of collecting GST from Australian companies.

Mr Strong added “we do understand that a lot more can be collected as there are reports that many overseas based retailers are circumventing the collection of GST by falsely claiming that no GST needs to be collected. These companies need to be treated like any Australian firm who dodges the GST — hunted and then fined.”

Mr Strong added “small business associations have a lot more information and advice to offer on a range of issues including vocational training, contract law, competition policy, and health. We must remember that small businesses live in the real world and that ideologues and desk bound policy makers must consult and listen if we are to continue with a good economy. As a result of the Australian Booksellers and others not giving up on the good fight, our budget is now better off. But if we had been listened to some 4 years ago we would now have more than one billion dollars extra in the Australian Governments’ tax income.”

Mr Strong also took pleasure in adding “we note that Amazon had a hissy fit when the initial legislation was introduced and said it would not sell into Australia ever again. It is currently selling into Australia and collecting GST like Australian businesses have been doing for almost 20 years.”

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