Closing tax loopholes: let's start at home

It requires no torturous bilateral or multilateral negotiations. Closing this loophole is as simple as doing away with the unfair exemption for overseas purchases.

This could not reasonably be argued to breach the government's pre-election undertakings in relation to the GST. The government said it would vary neither the rate nor the base of the tax. This change would not affect the rate, and it would only catch goods and services currently included in the tax base if sold domestically.

The plain fact is that the GST was always supposed to apply to these types of consumer products. It's time that it was applied fairly across the board.

Australia is not alone in grappling with this loophole in its tax regime. Most comparable nations around the world have already taken the action needed to close similar loopholes that once existed in their tax regimes.

And in response, the major global on-line retail corporations – which represent the vast bulk of on-line sales into Australia – have put in place systems to collect and remit the appropriate amount of tax to each individual government.

It would be no major imposition to ask them to comply with the same requirements Australian businesses face, in return for the privilege of selling into the domestic market.

This is not about erecting some non-tariff barrier to advantage Australian businesses. Quite the opposite – it's about creating an even playing field to ensure the Australian tax system works to encourage local businesses, rather than punishing them.

To take no action on this issue will place local businesses increasingly at a disadvantage. Already some larger retailers have publically canvassed the option of moving their on-line operations off shore, to take advantage of the tax exemption.

This not only flies in the face of the Treasurer's efforts to close international loopholes, but it also runs counter to the basic desire of Australian business people to contribute to our local economy.

Going on-line offshore is not something most retailers would have considered – yet. But it may become increasingly appealing to them as time goes on.

After all, the most obvious solution to a problem is often right in front of your eyes.