Monday, 19 June 2017
Treasury Laws Amendment (GST Low Value Goods) Bill 2017; In Committee
I thank Senator Macdonald for his contribution. Let me, on behalf of the government, indicate right at the outset that the government does not support this amendment. This issue has been reviewed many times over the years. All of the various collection models have been thoroughly assessed over the years and the government's judgement is that the vendor collection model is the most appropriate model to collect GST on low value goods as it takes into account who has the information to determine GST liabilities and prevents goods being held up at the border. The vendor collection model has been agreed to by the states and territories, as it is the most appropriate model to collect GST from overseas multinationals and to level the playing field for Australian businesses. Obviously, we will be concerned if the Senate were to vote to delay the implementation of this requirement. The advice that the government has in front of it from the relevant agencies is that the government is ready to administer this from 1 July 2017.
Let me also say in relation to the vendor collection model that it is assessed as the most efficient and cost-effective model, which is why Switzerland, for example, has announced legislation to require vendors to collect GST of value added tax on low value imports from 1 January 2018. Within the European Union, vendors are already required to charge and collect GST on sales within the European Union. The OECD and the EU are also focusing on taxation of goods by the supplier at the point of sale. It is also important to note that the vendor collection model has already been used to collect GST on cross-border digital products and services, and this is the case in countries such as Japan, South Korea, New Zealand, member states of the EU, Switzerland, Norway, South Africa and, from 1 July 2017, Australia.
We did consider the alternative of the logistics model whereby transport companies charge and collect GST. This model could provide a high level of coverage but it would also be very expensive to implement. Currently, transporters are removed from the point of sale and do not have complete information to assess the GST payable. This model would require the transport intermediaries as well as every vendor they deal with to provide additional data on the taxable or exempt nature of goods, as well as the consumer or business status of the importer, to calculate the GST. An important point in this context is that, according to the Department of Immigration and Border Protection data for 2015-16, more than 33 million consignments came into Australia with a value of less than $1,000.
In relation to the specific question that Senator Macdonald asked about evidence by some stakeholders that the logistics model would deliver higher revenue, Treasury's view is that the administration costs associated with collecting GST on the logistics model are likely to largely offset the amount of GST revenue collected, even if the collection model generates greater participation and compliance. For example, Australia Post, in their submission, stated that they would require an estimated $900 million per annum to support a logistics collection model, which would completely offset KPMG's estimate of the potential revenue. The main issue with the KPMG analysis is that it does not account for the differences in administration costs under each collection model. As I have indicated, for these reasons the government will not be supporting these amendments.