Shopping online could get a whole lot more expensive

The Abbott government is being urged to reduce the GST-free threshold for items bought online from overseas sources from $1000 to $20. The campaign would hit almost all goods purchased online with a 10 per cent tax. It is estimated that this will mean consumers have to pay an extra $1 billion per year for overseas purchases made online.

According to Victorian Premier John Brumby, a tax on goods purchased online from overseas would be "money for jam" topping up the government coffers that could then be spent on our health and education system.

"This (GST-free shopping) is costing Australian jobs. it's costing Australian retailers, it's a reverse tariff, it's an un-level playing field and it needs to be fixed," Mr Brumby told the National Press Club in Canberra. "And the beauty of computer technology and the internet is that in the old days these things might have been costly to administer, but I don't believe that's the case now."

Brumby says the application of a consumption tax on goods bought on the internet was "a complete non-issue" in Britain, the US and Canada and could help state finances here.

While in theory applying GST to nearly all goods brought into the country could help divert custom back to Australian businesses, the cost to consumers shouldn't be underestimated.

Budget conscious shoppers like students and young families who look to overseas retailers and internet research to reduce the pinch of the cost of living in Australia will be those hardest hit by the proposed reform and that estimated $1 billion dollars a year will be coming out of consumers pockets.

However, instituting a GST on the booming world of international, online purchasing won't stop people getting online to find a better deal and that's where aggregation websites like will come to the fore.

Although the tax will make it a little bit harder it won't stop consumers from working out ways to dodge GST and save money by shopping overseas. We'll probably see a resurgence of large shopping sprees and purchases being timed with trips to Asia or the USA and made on competitive prepaid travel cards in foreign currencies. After all, $1 billion dollars buys a lot of air tickets.