Sometimes the most obvious solution to a problem can be right in front of your eyes.
The new Federal Government is, rightly, wrangling with how to protect and promote vital industries such as manufacturing and agriculture, one of the nation's largest employment sectors is only now beginning to blossom after four years in the doldrums.
The retail sector in Australia employs in excess of 1.2 million people, compared with just over 1 million people in construction, 922,000 in manufacturing, and 307,000 in agriculture and related sectors.
However, potential growth in retail is being choked by an extraordinary tax arrangement that gives a trade advantage to overseas-based retailers, at the expense of Australian businesses and local jobs.
And with Treasurer Joe Hockey looking to close international tax loopholes in his quest for additional revenue, again, the most obvious solution may not be overseas at all, but right in front of the government's eyes.
When the GST legislation was drafted in 1999 by the Howard Government, online shopping was possible but it was not the mainstream phenomenon that it is today. Due to the low volume of on-line sales, the then Government decided to exempt all international sales worth $1000 or less from the new tax.
However, now that online shopping has become a huge and growing phenomenon, this Low Value Import Threshold (LVT) is an ever-increasing source of lost revenue for the Federal and State Governments.
Researched conducted by Ernst and Young, and commissioned by the National Retail Association, shows that lost GST revenue to the states will exceed $1 billion next financial year as a result of the LVT loophole.
The next report estimated the loophole will cost up to 33,400 local retail jobs – most likely the jobs of lower paid or vulnerable workers such as young people, single parents and senior workers returning to the workforce.
As retail profits decline and these jobs disappear, so too do many more millions in income and company taxes.
Having placed international tax loopholes firmly in his sights, Treasurer Joe Hockey should task his Commission of Audit with examining the revenue being lost now and in the future through the LVT.
At $1 billion in GST next year alone, this is not only one of the biggest and most obvious problems that should be considered in the context of government revenues and repairing government budgets, but it's also one of the easiest to fix.
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