Will GST Kill Offshore Online Shopping?

Retailers in Australia during the last few years have been doing it tough, as the shopping landscape changes and people look outside traditional shopping markets. Consumers are looking for variety and better value.

Gone are the days when your first port of call was your local shopping precinct or shopping mall. You can now do your browsing from home and find bargains and unique items with a few clicks of the mouse. This has of course resulted in an ever-increasing shift towards online shopping, a new frontier for shoppers and regulators alike.

Oz web Rewards supports Australian online businesses, mostly the small to medium size enterprises, who, like the big players, have to carve out a portion of the potential online retail pie. Most of our participating merchants offer great value for money, due to lower overheads than bigger brick and mortar stores; but if you believe the hype of the bigger chains,  the local Australian store is under threat due to offshore sites not having to pay GST. There has been a push by mainly big retailers to lower the threshold of GST to $20, so most incoming goods will result in a GST tariff being imposed. But is GST the reason shoppers go offshore to purchase goods, and will lowering the threshold be the remedy for all concerned?

We at Oz web Rewards, like everyone else in Australia, love a great quality bargain and will search widely for extra savings. While it is true that GST is a factor in the final cost paid, most people purchasing online do not do so to save 10%. GST. There are many other factors involved. The main influence is cost. Australians often pay much more than other countries for goods; sometimes over 100% more. This is the result by of distributors using GEO locking supply chains, and is an attempt to maximise profit margins in countries where competition is lower, meaning they can increase profit margins as well as keep the market share. With potential savings like, that introducing GST to purchases will not affect most buyers’ decisions to purchase goods or not. Why punish local Australian shoppers with extra tax just to prop up outdated big corporation profits?

The government should be looking at ways to support Australian retailer rights for comparable wholesale overseas prices; not only would it help Australian retailers directly compete with overseas suppliers, it would also mean all the sale proceeds are kept within Australia, not just the GST component.

As stated, the main push for lowering of the GST threshold is coming from the bigger end of retail, as they struggle with the new online economy. Smaller Australian retailers who have embraced the online process, such as all of the Oz web Rewards merchant members,  still offer great value for money, as they have lowered overheads to reduce costs and can hence offer value for money in competition to overseas stores.

Of course you will still find bargains overseas, but begin your search via Australia’s many great small online merchants; you will be surprised at the fantastic, quality bargains available locally. Lowering the GST threshold will not stop offshore online shopping, but will mean Australians continue to pay more for goods as offshore firms are allowed to GEO lock their supply chains.

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