The founder of Kogan Technologies, Ruslan Kogan, has slammed the current campaign for the application of GST on overseas online sales, saying Australian retailers need a “reality check”.
In a blog post, the online entrepreneur dismissed retailers’ calls for the application of GST to overseas online sales as an “expensive PR scare campaign” designed to pressure the government to increase taxes and duties.
Kogan argued that a 10 per cent price difference due to GST was not the issue when domestic bricks and mortar retail prices were up to 50 per cent more expensive than offshore competitors.
“By asking consumers to shop at their expensive stores, the big retailers are basically asking all other industries to subsidise their fat profits,” Kogan wrote.
“The big guys say they want an ‘even playing field’, so they spent millions of dollars on a national campaign to get a ’fair go’. But, it's hard to take them too seriously when Harvey Norman alone spent more than $355 million on ‘marketing expenses’ in FY2010, which was more than 26 per cent of their total sales revenue.”
Kogan also argued that calls for a level playing field were indicative of a desire for bigger retailers to curtail the effectiveness of their smaller competition rather than addressing a genuine issue with tax regulation.
“Whenever you hear a businessman crying out for more regulation or taxation, you know that his business is struggling and he wants some help from the government in pulling back his competitors,” the blog reads.
“If the big retailers are finding it hard to compete with the prices offered by their online competitors, they should consider streamlining their businesses and using their commercial clout to source products at better prices, instead of petitioning the government for tax increases and more regulation.”
Kogan’s comments follow suggestions from shadow treasurer, Joe Hockey, yesterday that the Opposition stood by its decision in government to lift the duty-free threshold to $1000 arguing that the $1000 limit was then required to stop “rorting.”
“Understand this: there was significant rorting of the duty-free program at airports when there was a previous lower limit,” Hockey said.
“We, in Government, increased it to $1000 which means that Australians can bring in up to $1000 of goods without paying GST. That system’s worked well.”
Consumer advocacy group Choice has described the retailers' campaign as an "alarmist red herring" driven by self-interest.
Follow Tim Lohman on Twitter: @tlohman
Follow Computerworld Australia on Twitter: @ComputerworldAu