Right: the enormous Amazon.com warehouse and distribution centre at Swansea in the UK.
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Background information
The operation of Australia's GST
Australia's GST (goods and services tax) is an indirect tax collected from businesses as a proportion of the price paid by consumers for goods and services supplied by the business.
Australia's GST is also payable by a person who imports goods. There is a $1000 lower limit or threshold on the value of goods which can be imported into Australia via online order before the GST is applied. This means that currently goods with a value of less than $1000 can be imported into Australia without being taxed. This is because the cost of administering the tax on goods of a lower price has been judged to be more than the taxation revenue that would be raised.
In 2011 an Australian Productivity Commission's report judged that the low value threshold for GST is not a main factor affecting the international competitiveness of Australian retailers. The Commission found there were valid grounds for imposing the GST on goods with a value of less than $1000 but that it is currently not cost-effective to do so.
The Commission calculated that lowering the threshold to $100, for example, could collect around $500 million in revenue, but at a cost of $1.2 billion in administration and compliance costs.
However, the Commission noted that if improvements were made to the cost of processing international parcels, the Government would be able to lower the threshold and impose the GST on imported goods of a lesser value.
In September 2012 the Low Value Parcel Processing Taskforce made a series of recommendations regarding ways in which the Australian government could more efficiently tax goods imported into Australia in response to online orders. One of the potential solutions warranting future consideration is the collection of duty and/or GST by financial intermediaries.