Why GST free international sales are not killing local retail

With Amazon.com recently being forced to pay state sales taxes in the USA some people are raising the question again about why GST cannot be levied on overseas based online retailers.  Well, this particular issue is a domestic U.S. problem where state sales taxes vary from one state to another and no international borders are crossed, so the problem is a little simpler to solve. 

We also do not have this issue in Australia.  GST is national and is levied on online purchases from Australian companies. The collection of GST on low value purchases from overseas is said not to be economically viable; however I am sure it could be done by data collection from banks, Paypal and other
payment services the same way NAB collects it statistics on online purchases.  Link this to your tax file number and send out a GST bill at the end of each financial year to each tax payer. Unpopular, but do-able and probably inevitable as retail and business purchases increasingly bleed overseas and the Australian Governments realise they are losing too much revenue.

The real issue for retail stores vs. online is that there is now international price transparency and the manufacturers are now being caught out with their differential pricing around the world.  With bike parts, for example, oneonline retailer I have worked with pays a higher wholesale price for parts from the Australian distributor than I can buy the same item landed in Australia from an overseas based online retailer.  Last night I bought 6 Oral B toothbrush heads from Coles for $44.40, I later checked Ebay and you can get 20 of the same item for $20 with free delivery!  That's $1 ea online (including GST) vs. $7.40 ea in the store.

So the argument that the lack of GST on international online sales is fuelling the online boom and the demise of the retail store is, and always has been a complete furphy.  Retailers are caught in a wave of technological and social change every bit as dramatic as the industrial revolution only faster, - much faster.  Lewis and Dart in "The New Rules of Retail" predict that 50% of retailers will ultimately disappear as their businesses become unsustainable.  If you are a retailer and wondering what to do, this book is a good place to start.

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