Kogan slams big retailers

Aussie online retailer serves the big boys

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.

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4 Comments

Veronica Rush

1

The big retailers want to ensure there is no innovation in Australia. They want to kill entrepreneurship in this country and hence are trying to get geographic monopoly for the region. They dont want any new players.

They dont want customers to have any options. As customers we can

"Stop buying from these retailers - Harvey Norman, Target, Myer and David Jones. When they have no customers then lets see how they react"

As citizens of this country we have ability to ensure GST is not forced upon us. Unitedly we can even abolish GST if this government forces its citizens into a corner.

If the big retailers have money to spend - let them spend - meanwhile we can stop spending at their stores until they accept market realities.

Deonast

2

@Veronica Rush we can't get the GST abolished it has been made abundantly clear by Labor and Liberal governments that the GST is here to stay.

While it is doubtful adding GST to overseas online purchases will make much difference to buying patterns (still more cost effective in many cases to buy online), it still is grossly unfair that retailers here are subject to GST and not overseas purchases online. Local web stores are subject to GST and since there is no chance of GST being repealed across the board that fair is fair it should be applied to all online overseas purchasing.

Still it will be hard to put in practice, but the government should be pursuing this as they are losing tax revenue. I'm sure Veronica Rush will be the first one complaining if income tax was increased to make up for lost GST revenues, though there is still a way to go before it has that large an impact.

Fitzy

3

I am a retailer myself and I think the large retailer's stance is self-serving rubbish. They haven't thought this through. The 10% of GST is NOT the issue. They should become more competitive and get rid of their huge margins and (in the case of Harvey Norman) the stupid and allegedly "free" long periods of interest-free payment. There are no free lunches and we all know WE are paying for that. Get real.

Veronica Rush

4

@Deonast I firmly believe that a lobby of a couple of retailers cant force the customers in corner by using/abusing their powers in the government.

If the citizens see that happening, they will change the government, Already the Labor is under scanner with Whaling, Mining, Desalination and now NBN.

The giant retailers have to let market evolve and thats is what capitalist markets are about.

By enforcing government to do their bidding, they are bringing in Communism, as well we should hand over our country to China.

What have these retailers done for our economy? They sell 80% of Chinese products and talk about saving Australian Jobs - its two faced.

Regarding your threat of increasing income tax - I dont mind government doing it - I wont complain. I will welcome if there is a need to help build a nation and not bleed one.

Also, who are retailers to decide on whether the government should increase or decrease tax on its citizens? They are simply working on making money for themselves and not for the country or its citizens.

Its time the big retailers either evolve or step aside and stop whining.

If they were so much of nationalistic, they wont employ dozens of accountants in their firms to avoid paying taxes to government.

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