Late last year, Chief Executive of Harvey Norman, Gerry Harvey started to get a little antsy. He complained that local retailers were under threat from online stores and called for online purchases from overseas to be taxed.
Not surprisingly, he found fast support from the major retailers (who also claim to be affected by online retailing) to call for the government to impose a GST on online products that cost under $1000 and to do it fast.
Julia Gillard called for the Productivity Commission to conduct an inquiry “into the impact of globalisation on the retail industry, including the growth of online shopping” The report is due back later this year. But that is not quick enough for some:
According to reports in ARN
Harvey Norman’s outspoken chairman, Gerry Harvey, has claimed many retailers will perish unless immediate action is taken to add GST onto Internet transactions of under $1000.
Speaking at a press conference surrounded by stocktake sales shoppers in Sydney’s CBD, Harvey said the GST imbalance would cost Australian jobs if not rectified as soon as possible.
He also rejected calls from Australian Retailer Association executive director, Russell Zimmerman, to wait for a report from the Productivity Commission into the issue before taking action.
“There are a lot of retailers that are going to go broke between now and the next three months,” Harvey said. “This has been taken to the Productivity Commission, which will take nine months to look at it and then make a recommendation to the Government.
“We can’t wait that long. For the case of a lot of retailers this is a matter of life or death.”
It is interesting to note that Harvey Norman does not actually have an online retail offering . This is interesting because if they did, perhaps people who LIKE to shop online for the convenience factor, might spend their $$$ there instead of overseas. Just a thought.
A group of major retailers including Harvey Norman, Myer, David Jones, Target, House, Borders and Angus & Robertson have taken to the national newspaper with full page adverts trying to raise support for this new GST.
The Herald Sun reports:
In the ads, the retail coalition, which collectively employs more than 76,000 people, warns that failing to act “will see a reduction in hours and shifts for casual and part-time workers, and ultimately cost Australians jobs in retail, manufacturing, logistics and related services”.
The advertisement also says that if the government does not want to impose GST on internet purchases — currently exempt from GST and import duty if less than $1000 — it should not impose it on domestic purchases.
“That means everyone is exempt from GST and duty charges for purchases less than $1000, or everyone has to pay GST and duty,” the ad reads.
The reaction to this advert has been resounding with #deargerryharvey trending on Twitter and very little support going to the major retailers. The Courier Mail reports:
Assistant Treasurer Bill Shorten maintains that imposing the GST on every item purchased from overseas is too expensive. “The cost of compliance would be greater than the tax raised,” he said, adding consumers and retailers wanted a considered response from the government, not a knee-jerk reaction….
Mr Harvey was unimpressed by the argument, accusing Mr Shorten of being out of touch.
“Bill, wake up,” he said.
In the same publication Christopher Zinn, spokesman for consumer advocacy group Choice described the retailers’ campaign as an “alarmist red herring” driven by self interest.
“The big chains should recognise that it’s their high prices, limited range and poor customer service that increasingly encourages people to use the internet,” spokesman Christopher Zinn said in a statement. “Consumers are simply chasing the best deal and the best service and often these days that is found online.”….
“Major stores are not being forced by anyone to charge these high prices,” Mr Zinn said. “This debate is about quality of service, competitive pricing and the inability of some retailers to understand the future of internet shopping.”
And the Australian reports independent senator Nick Xenophon disagreeing with the major retailers in favour of small business
INDEPENDENT Senator Nick Xenophon says imposing the GST on all internet purchases would be an administrative nightmare and highly impractical.
The South Australian Senator instead argues that the current exemption on internet purchases under $1000 from GST should be extended to small businesses. He said it was “extraordinary” that a coalition of big retailers were preparing a campaign designed to pressure the government to impose GST on all goods bought over the internet.
But Senator Xenophon says changes to GST laws should first apply to small businesses because major retailers already have a competitive advantage. “There ought to be GST exemptions for small businesses in this country otherwise we’ll get further and further behind,” he said.
“It’s a bit rich for the big retailers to suddenly become the consumer’s friend when it comes to this. It’s a bit like Goliath pretending to be David,” he said.
But the Greens have come out in support of the move. According to 9news
Acting Attorney-General Brendan O’Connor indicated on Tuesday the government would not change the laws, but Senator Brown said it should reconsider. “GST on imported goods is a reasonable thing,” he told reporters in Hobart on Tuesday.
“Why should the shop up the street have to charge GST for its customers but the shop selling goods out of Tokyo or California not have to charge GST?”
According to SMH:
THE Harvey Norman founder, Gerry Harvey, will step back from the retailers’ campaign for GST to be imposed on overseas online purchases, saying he is hurt by the avalanche of criticism directed at him and feels that getting involved was ”suicidal”.
He said the rise of social media such as Twitter and Facebook had increased the ”vicious and hateful” attacks against him and a fellow retail boss, Solomon Lew.
Mr Lew led the campaign, involving a coalition of retail companies, most of which are owned by the Lew family, which called on the government to end the GST exemption on imported goods worth less than $1000.
”You might have got a nasty phone call or a letter back in the old days but now anything slightly controversial, these people, whoever they might be, they go for you zealously and with hatred all over Twitter,” Mr Harvey said. ”If you are a CEO of a company and you speak out and then the board gets involved … it is suicidal.
”Because of my profile, I then get all these threats and people hone in on me. It becomes me, Gerry Harvey and Solomon Lew – billionaires, greedy, ugly, old, out-of-date c—s, and the people writing this seem to think we have been ripping them off for years and that we deserve this.”
The federal government has commissioned a review of retailing by the Productivity Commission. Mr Harvey said the gripe of the retailing coalition was not about ”online retail versus bricks and mortar” but rather about closing a tax loophole that did not support Australian jobs or the economy.
From ABC Online
Retailer Gerry Harvey says he is not stepping down from the campaign to have a GST placed on overseas online purchases.
Newspaper reports suggested he was retreating from the tax fight because of the criticism and personal attacks he has attracted from consumers.
Mr Harvey says that is not the case and he is 100 per cent behind the campaign and will remain so.
He says he would like to see other retailers take more of a public role, but he will never back down.
“That’s not in my nature to run away – I’ll stand up and fight,” he said.
“If I think something is right I’ll fight for it, always have. If it’s wrong or I’ve been proved wrong I’ll walk away and I’ll apologise.”
Mr Harvey is one of many retailers calling for the $1,000 tax-free threshold to be scrapped.
With such a fraction of total retailing coming from overseas websites, is this really an issue? Clearly, the big players think that it is likely to grow as a share of the whole retail pie and they’re worried. Are these major retailers out of touch with the way people want to shop in 2011? Do you shop online much? What kind of things do you buy? Is it simply a lack of good service in the form of competitive local websites that can offer the same kind of prices and service you can get from overseas?
Or perhaps you work in retailing – what’s YOUR view?