Trevor Evans (Brisbane, Liberal Party) Share this | Hansard source

I rise to speak strongly in favour of the Treasury Laws Amendment (GST Low Value Goods) Bill 2017, in the form that the government has proposed, and the scrapping of the GST low-value threshold. When I became the CEO of the National Retail Association, about five years ago now, this reform was one of the big three priorities described to me by the industry, by retailers large and small. This was holding back their international competitiveness, harming their growth, and hindering their ability to employ more Australians. Some small businesses I spoke to, especially in certain categories of products, saw this problem as the number one reason that they would have to close their doors. For some businesses that was undoubtedly and unfortunately their true and lived experience. Yet I do not want to convey a sense that this reform in any way represents a silver bullet for all of the challenges faced by the retail industry. It is one of a number of reforms, improvements and opportunities that need to be managed for the future of that sector.

I see this bill firstly as about closing a growing loophole in the tax system, about the integrity of the tax system, and, secondly, about fairness and a level playing field for Aussie businesses. It speaks volumes for some of the challenges of reform in today's world that in essence this policy debate was effectively had and won and over in less than two years and it then took a further two years for the political cycle and political interests to align sufficiently for the reform to proceed. Changes to the GST obviously do require the unanimous support of all of the states and territories, as well as the Commonwealth. In reality, that means that it requires bipartisan support, and this reform does have that. We should ignore some of the posturing and comments the shadow Treasurer made just then—honestly, a review to tell us what we already know. They are going to support this bill.

If I reflect on some of the conversations that I had with treasurers past in my previous role—and I will not breach any confidences—I will just say that I am well aware of what Labor's position has been on this reform at the highest levels, and it makes a mockery of some of what the shadow Treasurer just said. Not only is this bill long overdue but its passage is actually a positive reflection on the quiet achievements of this government. The Turnbull government has succeeded in achieving collaboration and reform, again and again, in areas where reforms have evaded so many former governments.

On the policy itself, let us be clear about why this reform debate was settled so quickly. The GST, when it was designed, was always supposed to apply to the products that we are talking about. You can like or dislike the rate of the GST or its scope, but the point is that the question of whether we have a GST, and the products that it applies to, was debated in this country almost 20 years ago. That debate is over. It was had and it was won. The GST was always intended to apply when Australians purchased and consumed the goods we are talking about right now.

At the time the GST was established online shopping did actually exist, but it was not the mainstream phenomenon that it is today. As the shadow Treasurer rightly pointed out, the issue of how the GST would be collected on small imports was basically relegated to a second-order issue. There were so many other priorities to consider in the design of the GST, so this $1,000 low-value threshold, I understand, was basically plucked from another place in the border and customs arrangements, without extra thought going into what might change in the future. But in the years since then online shopping has become a mainstream phenomenon and this low-value threshold has increasingly become a loophole, and a growing loophole, that undermines the integrity of our GST by stopping it from covering what was always intended to be covered.

It is worth pointing out at this time that the Commonwealth does not get the GST dollars we are talking about—those tax dollars go directly to the states and territories—but we must accept that it is and always has been a Commonwealth responsibility to ensure the ongoing integrity of the GST system. When loopholes become apparent or when the GST shows signs that it is no longer working as originally designed, it is up to the Commonwealth to lead the charge to mend it.

I go on to the issue of fairness. This is about a level playing field for Aussie businesses. As the phenomenon of internet shopping grew and as the international competition for the dollars of Aussie consumers has grown, the GST low-value threshold has started to operate essentially like a reverse tariff wall. In other words, it is making Aussie businesses less competitive compared to their international competitors, it is giving overseas competitors a financial leg-up compared to Aussie businesses, and the pricing advantage is not necessarily just the 10 per cent of the GST. When the low-value threshold kicks in, not only does the GST but so do tariffs, excise and customs charges. We have to remember that many of the types of goods that we are talking about—clothing, shoes, fabrics, sporting goods; you name it—are subject to a tariff or an excise too. So, depending on those tariffs, excises and customs charges, the differential can be as much as 20 per cent or even higher. So the 10 per cent to 20 per cent or even higher differential is the price disadvantage being placed on local businesses just because the world has changed and our local regulations have not kept up. We cannot allow our tax laws to be used in a way that entrenches competitive disadvantages against our own local businesses. This is about a level playing field for Aussie retailers. It does not give anyone a leg-up. In fact, it puts a stop to the leg-up that we are currently giving offshore competitors. This will ensure that local businesses at least are competing on a level playing field and are facing exactly the same taxes and regulations as their offshore competitors.

The amendments proposed in the bill are actually modest and simple. We are imposing exactly the same requirements to collect and remit GST, which are already being complied with by local Aussie businesses, onto similar companies that are selling exactly the same goods from offshore to Australian consumers. But I want to note—and I pick up on some of the comments of the shadow Treasurer—how the perfect has been the enemy of the good in achieving this reform and the reason for the delays to date. Different complex schemes have been raised by different parties at different times that might forensically examine all of the parcels coming in over the border or might be integrated with our mail system or with the parcel businesses or similar, and those schemes should continue to be explored, but they are not what is being proposed in this bill.

Occasionally I still hear the arguments around the cost of collection of the GST being outweighed by the GST collected, and that is completely incorrect to apply to this bill. That argument does not apply because, firstly, those estimates come from the more complex schemes that have been explored occasionally, but we are not proposing those schemes here. Secondly, the entire point of this reform is not to increase GST revenues; it is to fix the integrity of the tax system and close a loophole. We do not just give up on collecting income taxes because some people only pay a small amount of income tax or are difficult to collect it from. We certainly have not given up on collecting company taxes just because the world has changed and all sorts of new international schemes and corporate structures are possible. In fact, I see this reform sitting very neatly, side by side, with the government's other recent multinational tax avoidance laws which have clawed back almost $3 billion, and counting, this financial year. They are taxes which should always have been paid, consistent with the intention of our existing tax laws.

No tax is perfectly enforced—I will come back to that thought in a moment—yet efforts are made and should always be made to ensure that taxes are applied and enforced equally across the intended scope of taxpayers. Certainly, government should never publicly say that we will not even bother to try to collect tax from some activities or businesses just because the costs of collection are high or difficult. What sort of message does that send to mainstream taxpayers who are left shouldering the remaining tax burden? Under this reform, it will be up to the regulator to best direct their enforcement and compliance efforts to collect the GST from those intended to be within the scope of it, as it is with every other tax and every other regulator. No tax is perfectly enforced, as I said just a moment ago, and that should not stop us from making reforms like this to substantially close loopholes or weaknesses that become apparent over time. We do so clear eyed about the fact that it does not achieve 100 per cent enforcement and we do so clear eyed about the likelihood that these are probably not going to be the last reforms that we have to make on this journey. These reforms are timely—they are overdue, in fact. They are proportionate to the problem, and they are fair. These reforms will not cause the GST to suddenly be perfectly applied or enforced, but they will make it better. More reforms may well be considered. Indeed, the future for all of our major tax structures will continue to be explored.

I note the Senate review of this bill and its recommendation about the start date of this reform: pushing it back to 1 July 2018. I must say that I would have disagreed with that recommendation if I had been sitting on the committee. Again, here the perfect is being the enemy of the good. The Senate committee was responding to claims from mostly offshore large online website operators, which the shadow Treasurer acknowledged. He acknowledged that their interests are being served by ongoing delay. It was a shame to hear the shadow Treasurer just then parroting their lines. Their complaint generally has been that there has been insufficient time to consider and to comply, but that claim flies in the face of the fact that the state and territory treasurers had agreed to the collection model almost two years ago. Yes, the legislation has only been drafted more recently, but, honestly, how many different paths could this really have taken, given what the state and territory treasurers agreed to? This is always where these reforms were likely to land. Are these innovative online platforms capable of responding to the changing world or not? Do they already comply with similar obligations for different sales taxes and consumption taxes all around the world or not? Are their existing online platforms already collecting and remitting taxes for different states and territories in the US and the EU and other places based on the delivery addresses of their customers or not?

Nonetheless, I strongly support this bill and I commend it to the House. It does ensure a level playing field for businesses. It is fair, it is overdue and it upholds the integrity of our tax system by closing a growing loophole. It sits, as I said, very neatly with the government's other initiatives in multinational tax avoidance laws as we try as best we can to keep our tax laws up to date in what is a rapidly changing world. Most importantly, and very dear to my heart, the level playing field that this creates breaks down one of the many challenges and barriers being faced by our small business sector. They are the backbone of our economy as they continue to create the opportunities, the jobs and the prosperity that our country so critically needs. I commend the bill to the House.

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