Lloyds List Australia - Freight and Trade Alliance calls for a 12-month delay for GST collection on low value imports

Source: https://www.lloydslistaustralia.com.au/lla/blogs/paul-zalai/INDUSTRY-OPINION-Freight-and-Trade-Alliance-calls-for-a-12-month-delay-for-GST-collection-on-low-value-imports-554259.html

INDUSTRY OPINION:

THE Senate Economics Legislation Committee heard last Friday from the group of eBay, Amazon, Alibaba and Etsy arguing for a "Logistics" model to collect GST on low value goods at the border, this being well outside of the scope of the proposed bill.  

The powerful consortium stated that the government does not expect Westfield to collect and remit GST on behalf of all their retail tenants. They then made a comparison to their businesses, questioning the logic of the government to expect that they collect and remit GST on behalf of online sellers that use their eCommerce platforms as a means of reaching the market.

What became evident throughout the day was that the government drafted this legislation with minimal input from either the retail or the logistics sector and had a rushed implementation in preparing and delivering the Treasury Laws Amendment (GST Low Value Goods) Bill 2017. Other than the Australian Retail Association, there was no support for a July 1, 2017 implementation.

While all participants appearing before the committee supported the intent of the bill to collect GST on imported goods under $1000, none were putting their hand up to be the collection agent and most heavily criticised the legislation for its lack of detail and plethora of loopholes and unanswered questions.

Kai Lincoln, Managing Director SEKO Omni-Channel Logistics and I had the privilege of representing the Freight & Trade Alliance (FTA) before the committee. We acknowledged the government's proposed vendor collection model met key outcomes of the 2012 Low Value Parcel Processing Taskforce by not attempting to collect duty, focussing on GST collection only and removing any further strain on the Integrated Cargo System (ICS).

The Conference of Asia Pacific Express Carriers (CAPEC), representing DHL, Fedex, UPS and TNT, also supported the vendor collection model rejecting the viability of the logistics collection model. CAPEC stated they collectively receive on average a staggering 34,000 low value consignments per day. Based on this data it would be a massive undertaking to collect the necessary consignment data, physically complete import declarations and collect the GST from end consumers to meet existing volumes, let alone the projected growth of online transactions.

CAPEC also questioned the need to report the vendor registration number (VRN) at the border demonstrating data fields currently reported via the ICS on Self Assessment Clearances which should provide sufficient data for the government to monitor and audit off-shore retailers.

Supporting the argument from CAPEC, we asked whether the ICS could handle the equivalent increase in import declaration volumes and highlighted the risk that this poses to the entire international trade sector should the statutory reporting system come to a grinding halt.

The senators asked whether this would have serious consequences.

In response, we suggested that they have a chat to the then Customs minister, Chris Ellison who oversaw the flawed 2005 ICS implementation that did see our ports and airports come to a grinding halt.

We strongly urged the committee to gain advice from the Department of Immigration and Border Protection and seek an absolute guarantee that the ICS could deal with the projected increase in transactions. If there is any doubt about the ICS capability to cope, then we have a "show stopper" with this alone putting a line through the logistics collection model.

Alternatives to this would be to re-build the ICS or run another system in parallel purely for managing high volume, low value transactions. Does the government really have an appetite for this level of technology investment?

FTA and CAPEC were also united is putting a forward the position that any reform must be applied equally across the freight logistics sectors and questioning why Australia Post continually receives preferential statutory reporting treatment despite their commercial interests.

Labor has heard our concerns highlighting in Friday's media release the call from FTA and CAPEC for a 12-month delay to provide the necessary time to implement the government's proposed vendor collection model.

Perhaps with more time and further industry engagement, all parties can come together and develop some innovative solutions to set a global benchmark in dealing with this complex issue; however, there is no doubt that compromise will be required from traditional retail, eCommerce, logistics and the government in order to get a solution across-the-line.

Paul Zalai – Advocate for the Australian Freight and Trade sectors
"we do not just report the news, we make the news" - www.FTAlliance.com.au