eBay threatens to block Australians from using offshore sellers

Plan to collect local sales tax from all sellers has tat bazaar, Amazon and others fuming

Tat bazaar eBay has threatened to stop Australian buyers doing business with offshore sellers if the nation goes ahead with a plan to charge local sales taxes on imported goods.

Australia levies a goods and services tax (GST) at a rate of ten per cent, collected at the point of sale. But the tax is not applied to imports valued at under AU$1,000, leading local retailers to complain they can be undercut by offshore online sellers.

An 2011 inquiry found that charging GST on imported items valued at less than $1,000 would cost more money than it would raise, but that hasn't stopped Australia's current government from plowing ahead with a plan to collect GST on imports anyway and to start doing so as of July 1st 2017.

An inquiry into the plan will be held later this week and submissions on the proposal have been published ahead of hearings.

eBay's submission (PDF) is a doozy because it says “Regrettably, the Government’s legislation may force eBay to prevent Australians from buying from foreign sellers.” The tat bazaar argues that it is unfair that it do all the heavy lifting so that third-party sellers using its platform collect GST. Rather than do that work, eBay thinks it best to just cut Australians off from the world.

Amazon.com's submission (PDF) is a little more constructive, suggesting that local logistics providers collect GST instead of offshore retailers. This plan is advanced because logistics companies already collect GST on higher-valued imports, so have done the work required to collect GST.

Amazon and eBay both argue that the idea of asking them to become GST collectors is stupid because not all online shops would comply and Australia's government can't compel those without local presences to lift a finger in the cause of GST collection. Australian shoppers would quickly figure out which offshore retailers collect GST and shop with those who don't, negating claims of increased revenue flowing from the scheme.

UK-based sports goods outfit Wiggle uses the same argument, complaining it would be at a disadvantage compared to those who aren't investing in Australia. It also says (PDF) that the July 1 deadline is nowhere near enough time to change their systems to collect GST.

At this point readers around the world might be wondering why Australia would bother with such an obviously flawed plan. There's two reasons why the nation is bothering. First, Australia's running big budget deficits and the government is keen to be seen to be doing something, not least because local retailers are banging the "we pay tax and so do all the people we employ" drum.

Secondly, the plan also covers digital imports which currently evade GST. Netflix, for example, serves content from Australian soil but claims it is an offshore vendor immune to GST. Fixing that up will see a few bucks flow into Australian coffers, the better to build roads, hospitals, schools and line the pockets of storage vendors by subsidising telcos' metadata retention rigs.

Adobe's already signalled it will collect GST on cloud services sold locally, but provided from only-AWS-knows-where. ®