Levying GST on all packages is complicated and risky for everyone involved



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Amazon has restricted Australians’ access to goods from its American site because of the GST reforms.
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Kathryn James, Monash University

If like most Australians you have an online shopping habit, then as of this Sunday you will likely pay 10% more for any goods you have delivered from overseas suppliers.

The reforms rely on local and overseas businesses and platforms (such as eBay and Alibaba) that make more than A$75,000 worth of annual sales in Australia to collect Goods and Service Tax on sales of imported goods worth A$1,000 or less, and then pass on that revenue to Australian authorities. Australia is the first country to require offshore suppliers to collect GST.

Once a platform reaches the A$75,000 threshold, any business making sales to Australian consumers through that platform will need to charge GST regardless of its size.




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However, the complexity of the reforms might jeopardise the necessary cooperation of overseas businesses, and place consumers at risk of paying wrongly charged GST. It could also leave governments locked in to an ineffective way of collecting GST on imported goods.

The government’s own estimates suggest that, after taking into account exclusions and non-compliance, the reforms will capture only half of all eligible sales. This will generate modest revenues of A$300 million over the first three years.

Why the reforms?

There are several good reasons to extend GST to goods bought by Australian consumers from overseas suppliers.

Much has been made of the need to “level the playing field” between domestic retailers (who collect GST on all eligible sales) and overseas retailers (where GST is charged only on sales over A$1,000).

At a more basic level, as a tax on household consumption, the GST should tax the purchases of final consumers. Therefore all imports should be taxed under a GST, as this is where the goods will most likely be consumed.

The choice to not tax imports of low-value goods was made for a practical reason – the cost of customs authorities collecting the GST at the border could outweigh the revenue obtained. Estimates suggest the exclusion cost about A$390 million, or less than 1% of total GST revenues of A$62.2 billion for 2017-2018.

But this has changed with the expansion of online shopping and the development of collection methods other than at the border. These reforms are therefore best understood as a revenue-integrity measure.

What will be the effect of the changes?

As border authorities will continue to collect GST on imported goods worth more than A$1,000, the reforms effectively establish two separate schemes for imported goods.

It is possible for one transaction to be taxed at the point of sale (GST is payable on sales that include low-value goods even if the total value of the sale is more than A$1,000) and again at the border (because GST will continue to be payable on imports where the value of the whole consignment exceeds A$1,000 even if it consists entirely of low-value goods).

So if a consumer buys three pairs of boots at A$400 (A$1,200 total) the transaction might be taxable either at the point of sale (as a sale that includes low-value goods) or at the border (because the total value of the consignment is over A$1,000).




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The reforms contain rules to address this double taxation. For example, it can be avoided by the supplier providing notice to customs prior to importation.

In the event this doesn’t happen, the consumer risks paying the GST twice because no provision is made for refunding GST paid at the border.

Consumers would need to rely on the goodwill of the supplier to refund the wrongly paid GST. The same risk applies if an overseas supplier wrongly charges GST at the point of sale on a GST-free good such as a medical aid or appliance.

All of this will require a lot of cooperation by suppliers with little reward for compliance and only patchy enforcement mechanisms for those that don’t comply.

The response of suppliers and platforms

Despite big players warning that the reforms might “force marketplaces like eBay to prevent Australian buyers from purchasing from foreign sellers”, Amazon has been the only one to act. It announced on May 31 2018 that it would no longer ship from its US website direct to Australian consumers as of July 1.

Consumers will instead be redirected to the Amazon.au site (with Amazon collecting the GST on imports) or would need to engage a redelivery service to ship items bought on Amazon.com to Australia (with the redeliverer responsible for collecting GST).

Although Amazon is right to question the “workability” of the reforms, there is little doubt that Amazon has the capacity to comply, as Treasurer Scott Morrison has suggested.

Amazon’s chosen method to comply with its GST obligations results in either reduced choice for consumers (64 million goods via Amazon.com.au compared to 480 million on Amazon.com) or increased cost (if shopping through Amazon.com).

It also transfers the compliance costs from Amazon to redeliverers (no doubt offset by increased customers) and makes the redelivery provisions in the reforms, intended as a last resort, far more significant.




Read more:
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However, Amazon’s move is not simply about its capacity to comply with GST obligations in Australia. It must be understood in the context of governments around the world moving to collect GST and other taxes on online consumer spending.

Australia is the first jurisdiction to move to adopt a vendor-platform collection model and many jurisdictions are poised to follow suit (the European Union, Switzerland and New Zealand have all announced similar reforms). The Amazon response might give them pause for thought, and sufficient pause is all that might be needed.

Amazon would like transporters such as freight and logistics companies and Australia Post to collect GST on imported goods because it means suppliers and platforms like Amazon won’t have to do so.

The transporter method potentially offers a more reliable method to collect GST, but the paper-based international postal system is unable to do so at least until 2023.

Amazon appears willing to take a short-term hit while waiting for technology and regulatory change to make it viable to adopt its preferred method of transporter collection.

The ConversationIn the meantime, consumers should take care when making purchases from overseas suppliers to ensure as much as they can that GST is being correctly charged. And the world is watching.

Kathryn James, Senior lecturer, Law, Monash University

This article was originally published on The Conversation. Read the original article.

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Government ‘dares’ the Senate on its corporate and income tax packages


Michelle Grattan, University of Canberra

The government will put both its company tax legislation and its income tax package to the Senate before parliament rises in late June, Finance Minister Mathias Cormann has confirmed.

Cormann also sought to scotch suggestions that the tax cuts for big businesses might be dropped if they were defeated then, saying “we are totally committed to the reform”.

He told reporters on Monday the corporate tax cuts were “even more important and more urgent now” than when the government took its package to the election as its central policy in 2016.

Within Coalition ranks there are doubts about persisting with the company tax measure if it can’t be legislated. The chances of the legislation passing the Senate plummeted last week when Pauline Hanson went back on her commitment to back it. But on Monday she appeared to be sounding a little less adamantly opposed, and invited people to contact her office with their views.

With three Senate votes Hanson has a veto.

Cormann committed the government to take the plan to the Super Saturday July 28 byelections if it was defeated in parliament.

He again ruled out a compromise that set a $500 million annual turnover threshold, which would give the package a greater chance of success. That would exclude the highly unpopular banks, as well as other big companies, from the cut.

Cormann said such a threshold “would be a barrier to growth. If you put an artificial ceiling on the growth that a business can aim for by essentially providing a disincentive to further growth beyond that threshold, you are putting a brake on jobs growth”.

The government has already legislated for tax cuts for firms of up to $50 million turnover. That limit was a deal with Senate crossbenchers.

The company tax cuts as well as the competing government and opposition income tax packages are set to be core battlegrounds in the byelections.

The government is also holding firm on not dividing up its three-stage income tax legislation. “We will not split the package”, Cormann said.
“Bill Shorten has to make a decision whether he wants to stand in the way of personal income tax relief for low and middle income earners.

“He has to make a decision whether his anti-aspiration, politics of envy vendetta is more important to him than providing cost-of-living pressure relief to low and middle income earners.”

Stage three of the government’s income tax package is the most controversial part because it flattens the tax scale. The benefits for low and middle incomes earners are in stage one, which the opposition supports. Labor, while highly critical of the third stage, has not said what it would do in the Senate if the government refuses to have at least that stage split off.

The government this week will continue talking with crossbenchers over the two tax packages.

Campaigning in Braddon, one of the byelection seats, Shorten said Malcolm Turnbull’s “corporate tax cuts are dead, buried and cremated – he is just too silly and arrogant to realise that.”

“‘Every extra dollar that goes to the Commonwealth Bank, or Westpac or ANZ or NAB, is a dollar less we have got in our in our kids’ schools, it’s a dollar less we’ve got to help the pensioners with their power bills, it’s a dollar less to help people when they are sick,” the opposition leader said.

Newspoll, published in Monday’s Australian, asked people whether the proposed changes to company tax rates should come into effect as soon as possible, in stages over the next 10 years, or not at all. More than a third (36%) said as soon as possible, 27% said in stages and 29% said not at all.

The poll had Labor back with a 52-48% two-party lead, compared with 51-49% in the last two polls.

The ConversationIt also saw Anthony Albanese heading Shorten as better Labor leader, 26% to 23%. Tanya Plibersek was also on 23%. The prospect of the byelection has stirred some leadership muttering in the ALP.

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

Plot Targeting Turkey’s Religious Minorities Allegedly Discovered


CD indicates naval officers planned violence against non-Muslim communities.

ISTANBUL, December 16 (CDN) — ISTANBUL, December 16 (Compass Direct News) – Chilling allegations emerged last month of a detailed plot by Turkish naval officers to perpetrate threats and violence against the nation’s non-Muslims in an effort to implicate and unseat Turkey’s pro-Islamic government.

Evidence put forth for the plot appeared on an encrypted compact disc discovered last April but was only recently deciphered; the daily Taraf newspaper first leaked details of the CD’s contents on Nov. 19.

Entitled the “Operation Cage Action Plan,” the plot outlines a plethora of planned threat campaigns, bomb attacks, kidnappings and assassinations targeting the nation’s tiny religious minority communities – an apparent effort by military brass to discredit the ruling Justice and Development Party (AKP). The scheme ultimately called for bombings of homes and buildings owned by non-Muslims, setting fire to homes, vehicles and businesses of Christian and Jewish citizens, and murdering prominent leaders among the religious minorities.

Dated March 2009, the CD containing details of the plot was discovered in a raid on the office of a retired major implicated in a large illegal cache of military arms uncovered near Istanbul last April. Once deciphered, it revealed the full names of 41 naval officials assigned to carry out a four-phase campaign exploiting the vulnerability of Turkey’s non-Muslim religious minorities, who constitute less than 1 percent of the population.

A map that Taraf published on its front page – headlined “The Targeted Missionaries” – was based on the controversial CD documents. Color-coded to show all the Turkish provinces where non-Muslims lived or had meetings for worship, the map showed only 13 of Turkey’s 81 provinces had no known non-Muslim residents or religious meetings.

The plan identified 939 non-Muslim representatives in Turkey as possible targets.

“If even half of what is written in Taraf is accurate, everybody with a conscience in this country has to go mad,” Eyup Can wrote in his Hurriyet column two days after the news broke.

The day after the first Taraf report, the headquarters of the Turkish General Staff filed a criminal complaint against the daily with the Justice Ministry, declaring its coverage a “clear violation” of the laws protecting ongoing prosecution investigations from public release.

Although the prime minister’s office the next day confirmed that the newly revealed “Cage” plot was indeed under official investigation, Prime Minister Recep Tayyip Erdogan criticized Taraf’s public disclosure of the plan as “interfering” and “damaging” to the judicial process and important sectors of the government.

But when the judiciary began interrogating a number of the named naval suspects and sent some of them to jail, most Turkish media – which had downplayed the claims – began to accept the plot’s possible authenticity.

To date, at least 11 of the naval officials identified in the Cage documents are under arrest, accused of membership in an illegal organization. They include a retired major, a lieutenant colonel, three lieutenant commanders, two colonels and three first sergeants.

The latest plot allegations are linked to criminal investigations launched in June 2007 into Ergenekon, an alleged “deep state” conspiracy by a group of military officials, state security personnel, lawyers and journalists now behind bars on charges of planning a coup against the elected AKP government.

Christian Murders Termed ‘Operations’

The plot document began with specific mention of the three most recent deadly attacks perpetrated against Christians in Turkey, cryptically labeling them “operations.”

Initial Turkish public opinion had blamed Islamist groups for the savage murders of Italian Catholic priest Andrea Santoro (February 2006), Turkish Armenian Agos newspaper editor Hrant Dink (January 2007) and two Turkish Christians and a German Christian in Malatya (April 2007). But authors of the Cage plan complained that AKP’s “intensive propaganda” after these incidents had instead fingered the Ergenekon cabal as the perpetrators.

“The Cage plan demanded that these ‘operations’ be conducted in a more systematic and planned manner,” attorney Orhan Kemal Cengiz wrote in Today’s Zaman on Nov. 27. “They want to re-market the ‘black propaganda’ that Muslims kill Christians,” concluded Cengiz, a joint-plaintiff lawyer in the Malatya murder trial and legal adviser to Turkey’s Association of Protestant Churches.

In the first phase of the Cage plot, officers were ordered to compile information identifying the non-Muslim communities’ leaders, schools, associations, cemeteries, places of worship and media outlets, including all subscribers to the Armenian Agos weekly. With this data, the second stage called for creating an atmosphere of fear by openly targeting these religious minorities, using intimidating letters and telephone calls, warnings posted on websites linked to the government and graffiti in neighborhoods where non-Muslims lived.

To channel public opinion, the third phase centered on priming TV and print media to criticize and debate the AKP government’s handling of security for religious minorities, to raise the specter of the party ultimately replacing Turkey’s secular laws and institutions with Islamic provisions.

The final phase called for planting bombs and suspicious packages near homes and buildings owned by non-Muslims, desecrating their cemeteries, setting fire to homes, vehicles and businesses of Christian and Jewish citizens, and even kidnapping and assassinating prominent leaders among the religious minorities.

Lawyer Fethiye Cetin, representing the Dink family in the Agos editor’s murder trial, admitted she was having difficulty even accepting the details of the Cage plot.

“I am engulfed in horror,” Cetin told Bianet, the online Independent Communications Network. “Some forces of this country sit down and make a plan to identify their fellow citizens, of their own country, as enemies! They will kill Armenians and non-Muslims in the psychological war they are conducting against the ones identified as their enemies.”

No Surprise to Christians

“We were not very shocked,” Protestant Pastor Ihsan Ozbek of the Kurtulus Churches in Ankara admitted to Taraf the day after the news broke.

After the Malatya murders, he stated, Christians had no official means to investigate their suspicions about the instigators, “and we could not be very brave . . . Once again the evidence is being seen, that it is the juntas who are against democracy who [have been] behind the propaganda in the past 10 years against Christianity and missionary activity.”

Patriarch Bartholomew of the Greek Orthodox Church also openly addressed the Cage plot, referring to recent incidents of intimidation against Christian and Jewish citizens in Istanbul’s Kurtulus and Adalar districts, as well as a previous raid conducted against the alumni of a Greek high school.

“At the time, we thought that they were just trying to scare us,” he told Today’s Zaman. Several of the jailed Ergenekon suspects now on trial were closely involved for years in protesting and slandering the Istanbul Patriarchate, considered the heart of Eastern Orthodoxy’s 300 million adherents. As ultranationalists, they claimed the Orthodox wanted to set up a Vatican-style entity within Turkey.

Last summer 90 graves were desecrated in the Greek Orthodox community’s Balikli cemetery in the Zeytinburnu district of Istanbul. The city’s 65 non-Muslim cemeteries are not guarded by the municipality, with their maintenance and protection left to Greek, Armenian and Jewish minorities.

As details continued to emerge and national debates raged for more than a week over the Cage plan in the Turkish media, calls came from a broad spectrum of society to merge the files of the ongoing Dink and Malatya murder trials with the Ergenekon file. The Turkish General Staff has consistently labeled much of the media coverage of the Ergenekon investigations as part of smear campaign against the fiercely secular military, which until the past two years enjoyed virtual impunity from civilian court investigations.

According to Ria Oomen-Ruijten, the European Parliament’s rapporteur on Turkey, the long-entrenched role of the military in the Turkish government is an “obstacle” for further democratization and integration into the EU.

Report from Compass Direct News