Australia Extends Tax to Online Overseas Book Orders

Australia's Parliament has passed legislation imposing a 10% goods and services tax on low-value imports, including books, purchased from online overseas sellers, effective July 1, 2018. Vendors with less than AU$75,000 (about US$59,250) turnover are exempt. Amazon was among the companies opposing the law. Books+Publishing reported that "the government first announced its intention to repeal the AU$1,000 [about US$790] GST-free threshold on online imports in 2015. The Australian Booksellers Association has long campaigned on the issue and advocated a zero threshold on overseas purchases."

In a recent speech at the Booksellers NZ Conference in Auckland, ABA CEO Joel Becker said that from the beginning, the organization's campaign was largely based on two main contentions: "When the GST was introduced in Australia, everyone was fairly clueless about eCommerce. The most radical thing happening was being able to order your pizza online, and had little to do with global commerce. Over the last 15 years or so, billions of dollars have been lost to the economy as people buy cameras and books and bicycles and cosmetics and everything else imaginable online and offshore. Those billions of dollars [didn't go] to paying for schools, hospitals, roads, social services police and essential infrastructure. A great black hole was created.

"The second issue was one of a level playing field. In effect, in the name of free enterprise and a global economy, the free marketeers assisted in the creation of a virtual protection racket; and those being protected were off-shore global entities, who had a 10% (15% in N.Z.) head start. On top of that, because of the International Postal Union Treaty, companies like Amazon's baby brother, BookDepository, could ship to Australia with advantageous postal rates from Royal Mail and ridiculous tax concessions."

Two years ago, Joe Hockey, who was Federal Treasurer at the time, announced the government would legislate to close the loophole. Earlier this year, with legislation proposed to take effect on July 1, 2017, "there were hearings which featured a team of tax lawyers from Google, eBay, Ali Baba, and--guess who--Amazon, telling a parliamentary committee that it was all too complex. They suggested didn't have sophisticated enough systems to deliver," Becker noted.

At the time, Kevin Willis, Amazon's director of global trade services, told the Sydney Morning Herald the collection model was "unworkable" and the bill as it stood might destroy competition and raise prices. He added that he had never seen a tax of this magnitude and complexity.

"Here I'll admit that the 'gag reflex' started to take hold," Becker recalled. "Imagine that--the most sophisticated tech companies in the world didn't have the capacity to do what every business in Australia and New Zealand does every day! And they got their way... for a while. The government decided that they needed to give them 12 months to do what I suspect they could have done in 24 hours. However--and this is the good news, they did move forward!"

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