Monday, 19 June 2017
Treasury Laws Amendment (GST Low Value Goods) Bill 2017; Second Reading
I rise to speak today on behalf of the Australian Greens on the Treasury Laws Amendment (GST Low Value Goods) Bill 2017. Consistency is very important in politics, and the Greens have always had a very strong position of voting against GST when it was implemented. It is not a progressive tax. Members right around the country play a very important role in our policy formulation, and we do not support taxes that are not progressive. GST is a regressive tax. Every time there has been debate and discussion in this place about broadening the GST or increasing the rate of the GST, the Greens have consistently opposed it. Rather than just opposition, we have always embarked on proposition. We have always found other proposals and other ways to raise revenue in this country, and we are all for raising revenue, but we would like to see it done in a fair and equitable manner. We do not believe the GST is a fair and equitable tax. Hence, on applying it to low-value goods, we will again take the consistent position that will be opposing this bill today. We do not support GST as a fundamental principle, and we will not be supporting the bill today.
However, I would like to say there are other reasons for this. Even if that were not our policy position, there are other reasons that we would not be supporting this bill today. We do not believe that it is the right model. It is very important to be clear about this. Low-value imported goods are currently exempt from GST because, to date, it has not been considered worth the effort to collect the tax. It has not been considered worth the effort.
When we talk about the efficiencies of policies we look at how much it costs to implement, administer and enforce them and weigh that against the revenue benefit and potential economic benefit to get some kind of metric on efficiency. The proposition that the government has in the legislation before us today, certainly on all the evidence that I have heard, is not an efficient tax by any stretch of the imagination. In Mr Hockey's own 2015 tax white paper, he explained:
The exclusion from the GST base for imported services reflects how difficult it is to identify the supplier and recipient in a transaction because it has not occurred physically and, unlike imported goods, cannot be stopped at a border.
Everybody is clear about this: this is a very complex area. To put this simply, the Australian Taxation Office has better things to do than to go chasing $10 or $20 of GST here or there from literally tens of thousands of suppliers all over the world. The problem with this bill is that it does not seem to address that key fundamental problem. The vendor model that this bill proposes would require each of those tens of thousands of online retailers from all over the world to collect the tax for the tax office and then pass it on. We have already heard some contributions in here today about how difficult that is going to be and how easily that system will be gamed. I think it is fair to say that, even when you look at the explanatory memorandum that has been provided to senators, it has still not been made clear exactly how the ATO will do this. We have sympathy for the idea of parity and equity between domestic businesses and overseas businesses, for trying to ensure that our domestic retailers are not at a competitive disadvantage. But, as noted in an article in The Conversation by Kathrin Bain, from which I will read very shortly, it is still unclear exactly how much parity between domestic retailers and overseas retailers this is going to achieve.
One of the golden rules of taxes is that they have to be enforceable, and efficiently so. The Greens believe that the government should go back to the drawing board with this tax and get it right. It has been raised in here already that the government-dominated Economics Legislation Committee also recommended that this legislation not be implemented immediately; that there be a 12-month delay on the implementation, subject to getting it right. I find it quite ludicrous that we are here today to pass legislation that everybody seems to agree is second-rate. Why wouldn't we just get it right and then bring it back so that we can vote on legislation that we are all happy with?
That brings me to Labor's amendment. We have a choice, as a party, between voting for legislation that the government is likely to get up and have the numbers on, which begins immediately with a second-rate model, or supporting Labor's amendment to at least delay the legislation for 12 months and get the Productivity Commission to do a study. Of course, that does not bind the government. As Senator Cormann in the chamber here today knows, the government will look at the Productivity Commission's report. It may or may not take those recommendations on board. It has the discretion, as the executive, as to whether or not it wants to do that. So essentially we are, today, voting for the legislation to be implemented. Even a delay is no guarantee that we are going to this fix this and get it right. We can only hope that, if the Productivity Commission does look in detail at the differences between the models—for example, between the logistics model and the vendor model—and properly costs what it will take to administer and enforce the various regimes, perhaps the government will change this legislation and put up an amendment for us to all vote on. We would rather see that happen now. We would rather see the government get it right and bring it forward.
With that proposition in front of us, the Greens will be supporting Labor's amendment today. At least it gives us the opportunity to fix some of the mechanics of this bill and get it right. And I would hope that the government would take on board any recommendations by the Productivity Commission in that regard. We do believe there is merit in looking at the logistics model, which would collect the tax through distribution channels. I have met with various online retailers and other stakeholders, and I understand that this proposition has been raised at the legislative committee level and directly with Treasury and government. The merit of a logistics model is that there is a much smaller number—more likely a handful—of businesses through which imported goods are distributed, which makes it easier to administer. The ATO's task would be much simpler under this model and the model is also more likely to ensure that all imported goods are captured, whereas, with the vendor model in the legislation we have in front of us, you could drive jumbo jets through some of the holes in it. If we are trying to achieve parity, then that is not going to be the case.
I would like to go into a bit more detail as to why the proposed legislation does not set out to achieve its aim of levelling the playing field for our domestic retailers. It unfairly imposes GST on goods purchased from some overseas sellers that would not be subject to GST if purchased from an Australian seller. Kathrin Bain wrote an excellent article in The Conversation, on 21 April 2017, that explained some of the key or fundamental problems with this legislation. She said:
Currently, low-value imports (those with a customs value of A$1,000 or less) are exempt from GST. If the legislation is passed, overseas vendors who sell more than A$75,000 of low-value goods to Australian consumers would be required to register for GST, and collect and remit GST on low-value goods to the ATO.
Those imports will continue to be stopped at the border with any GST, customs duty, and associated fees paid to Australian Border Force by the importer before the goods are released.
For sellers of low-value goods it will mean that an overseas supplier of both low and high value goods will be subject to two separate tax regimes. The requirement to collect GST will apply only to low-value goods.
… … …
While extending the GST to these goods is meant to level the playing field between overseas and Australian vendors, treating the online marketplace or mail forwarder as the supplier of goods is inconsistent with the treatment of domestic transactions.
As eBay has stated in their submission to the Senate Committee: "eBay is not a seller. eBay is a third-party online marketplace that simply connects buyers and sellers".
For Australian vendors who sell items on eBay, it’s the individual seller who is responsible for collecting and remitting GST on products they sell (if they are required to be registered). A seller who uses eBay, but isn't carrying on an enterprise or does not meet the A$75,000 turnover threshold, isn't required to be registered and would not be required to collect GST on their sales.
She states further in regard to the proposed legislation we have before us today:
However, the proposed legislation does not treat overseas vendors in this way, by treating online marketplaces and mail forwarding services as the supplier of goods.
So it seems as though the legislation has missed the point. She states further:
… small, individual vendors should not (if their turnover of low-value goods into Australia is less than A$75,000) be required to collect GST merely because they use an online marketplace.
EBay has gone as far as stating in their submission that: "Regrettably, the Government's legislation may force eBay to prevent Australians from buying from foreign sellers". This is because they would not be able to comply with the requirements imposed under the new legislation.
We can talk more about the various amendments when we come to the committee stage. My colleague Senator Waters has moved an amendment already in relation to removing GST from female sanitary products, particularly tampons. We have had this discussion in here today and it is a very important issue for many Australians—nearly half. For some reason, the razorblades I used to shave this morning are GST exempt because they are deemed to be an essential item for my male hygiene, yet women's tampons are not considered to be an essential item under the GST law. Senator Waters has already given a great speech on this and we are very keen to see this issue fixed. Senator Dastyari, who is in the chamber the moment, has raised this issue at estimates. I know it is something the Labor Party feels strongly about. We look forward to having a discussion on that in committee.
Lastly—I cannot let this go unchallenged—some WA senators in here today have used this as an opportunity to talk about how hardly done by Western Australia is under the current GST calculations, with horizontal fiscal equalisation. Senator Smith, I say to you, through the chair, that since Federation Western Australia has been a recipient of the generosity of the other states. This is what fiscal equalisation was set up to do. It is actually extremely complex in terms of the calculations and the assumptions we make, but the principle behind it is really simple. It is about equality around our country. It is about the wealthier states transferring their wealth to help the poorer states. At different times since Federation different states have been donor states under these calculations and different states have been recipients. Throughout nearly all of its history WA has been a recipient of GST and other revenue from the Commonwealth. Through two mining booms, suddenly they are a donor state. They are very likely to be a recipient state again shortly, I understand, Senator Smith. If you squandered the benefits of the mining boom, do not come crying to the federal Senate to try and fix this problem for you. I can tell you that in my home state of Tasmania, when the exchange rate went to $1.15 against the US dollar—we rely on exports from our state. It is ironic that we have an excellent Western Australian senator in the chair at the moment, and this is good.