Friday, 4 October 2013

Would somebody please think of the jobs?

Consumer group Choice has released research claiming that the Low Value Threshold has little to do with the decision to buy online. Currently, GST is not charged on purchases under $1,000 from overseas retailers, much to the eternal chagrin of old-school retailers associations and Gerry Harvey, who claim it is costing Australian jobs.

Choice claims only 12 per cent of those surveyed nominated saving "paying duties and taxes by purchasing on overseas websites" as a reason for shopping online.

Cue the droning of the rentseekers. One of my industry publications, Photo Counter, claims Choice is being "too tricky by half" in their fairly straight-forward survey of consumers. I can't follow Photo Counter's argument, but it's there and if someone else can, feel free to explain it to me. Basically, it seems Photo Counter has merely fallen on Solomon Lew's argument that the threshold is costing jobs.

The Australian business victimhood mindset is well and truly alive. Instead of offering what consumers want, some local retailers continue to ignore the local market, instead sticking to decades-old retail models. Ultimately, these multi-millionaire retail bosses are acting in self interest and are anti-consumer.

The Productivity Commission found that lowering the GST-free threshold would cost Australians more that $1.5 billion (collecting $550 million in taxes, but costing $2 to collect!). This hasn't stopped the Rich List clamouring for change - change that would effectively be a state-funded subsidy to big business. The LVT was judged by the Productivity Commission to be a "minor" component of the competitive disadvantage experience by Australian retailers.

The fact is that, so long as the AUD remains buoyant, imposing a lower threshold would have little effect on the online purchasing habits of consumers. Stuff is still too cheap, even with a 10 percent tax imposed on top.

But let's not let facts and figures get in the way of a good story.

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