The click frenzy could soon be over with a new government proposal set to send online shopping prices skyrocketing.
A recent Fairfax report revealed that the Department of Home Affairs have proposed a $5 tax on every parcel coming into the country from overseas under the value of $1,000. This new tax will be independent of the ten percent GST imposed on small online goods under the same amount which comes into effect on July 1 this year.
If the new tax passes the bill it could affect up to 90 percent of deliveries coming into Australia whilst putting online shoppers in dire situation.
According to the report the new tax will be designed to reinforce Australia’s biosecurity budget – a fund which has taken a serious hit since the exponential growth of online shopping across the nation.
In the last financial year it was recorded that 38.7 million packages under $1,000 entered the country via overseas. This figure reflects a 22 percent growth from the previous year and the government is expecting this rate to grow even more.
“We expect the cost of the levy per parcel to be in the dollars not the cents”
“As the volume of imported low value consignments continues to grow, so too do the costs of biosecurity, cargo and trade border activities for those consignments. This has created increasing inequity and cross-subsidisation, where importers of high value consignments are paying for the border activities attributable to other users,” a February 2018 discussion paper obtained by the SMH notes.
“Existing cost recovery arrangements are no longer sustainable and will not support Australia’s future trading environment.”
If that wasn’t bad news enough, Freight and Trade Alliance director Paul Zalai said that whilst the tax would be footed mostly by freight and express courier services, the cost would eventually be passed onto shoppers.
“We expect the cost of the levy per parcel to be in the dollars not the cents,” he added.
Some experts are already calling the new tax a bad idea with its combination alongside the GST potentially doubling the cost of online purchases. On the other side of the fence it could also do damage to the economy with nations that regularly do business by posting items to Australian shoppers.
“We should not be surprised if local small to medium exporters face reciprocal charges administered by foreign jurisdictions – a less than ideal outcome in an environment whereby our government is otherwise going to great lengths to remove trade barriers,” said Zalai.
If the $5 online shopping tax becomes a reality it will see the Australia’s biosecurity budget inflate to $200 million.