Netregistry backs Gerry Harvey’s GST war


Local hosting and domain name specialist Netregistry has backed the Gerry Harvey-fronted push for a level tax playing field between Australian and international retailers, saying the issue was affecting its massive local small to medium business customer base.

The issue blew up shortly after Christmas, with a number of local retail giants such as Harvey Norman, Angus & Robertson, David Jones, Just Jeans, Myer and more — publishing an open letter demanding a “fair go” in the retail sector, pointing out that international retailers weren’t forced to collect the 10 percent GST on purchases under $1,000, or pay for stamp duty.

Since that time, Harvey himself has appeared to back down slightly from the push, facing strong internet criticism with regards to the issue. However, other organisations have come out of the woodwork to support the retailers on the issue — with the latest today being NetRegistry.

“Australian consumers need to understand this exemption in the context of the survival of tens of thousands of small businesses owned and staffed by their friends and families,” said Netregistry chief executive Larry Bloch (pictured above), in a statement issued this afternoon.

“The Australian Government refusing to take timely action on their behalf is yet another indictment of a Government that fails to support the millions of Australians who are dependent on small businesses for their future — as owners, spouses, family or staff in the over 1 million small businesses in Australia.”

Bloch claimed that while small retailers had taken advantage of the internet in Australia, they were disadvantaged by the disparity in price, compared with overseas rivals — which he said was “a direct result of the unequal Australian tax regime”. The internet executive said the issue wasn’t about the profits of large retailers — but about “the basic fairness of our tax policies towards decent, everyday Australians” — who, he said, were trying to have a fair go, without asking for anything from anyone.

In a separate opinion piece on the matter published today on the website of Nett Magazine — which Netregistry owns — Bloch said the retailers’ campaign message had been “crafted badly” and “atrociously delivered”.

“But despite this failing, the underlying issue is serious and deserves careful consideration. It is not about large retailers being under threat but rather the reality that vast masses of Australian Small Businesses exposed to this particular inequity may well suffer far more than the big end of town as their livelihood is at stake,” wrote Bloch.

In its open letter, the so-called Retail Coalition didn’t demand that the tax be levied against international retailers as well as the locals. Instead, it said there were two options to create what it described as “a level playing field”: Either everyone could be taxed, or the exemption enjoyed by the foreign players could be extended locally.

Image credit: Netregistry


  1. So, most places in the USA charge a consumption tax on purchases – do these businesses want the USA and China etc. to slap a GST on them at the foreign end, as well – because when you say you are for it, it will be hard to argue. :)

    • The US already does charge a duty on such imports – all items over $200 and gifts over $100. Canada charges duty and tax on any mail item over $20 and any gifts over $60. The UK charges import VAT on all goods purchased over the internet over £18, and over £40 for gifts. Sweden collects duty on all internet purchases regardless of price

  2. Larry [also pasted this on the original article]

    I strongly disagree with your argument on a number of basis.

    1) The implementation and cost of such a strategy has already been shown to be unfeasible already by a taxation study. The cost of monitoring every import and extracting 10% GST is blandly unfeasible. The ATO would have to implement huge systems to monitor imports and you are only complaining at the moment because of the high Australia dollar. Lets assume it falls back to around $0.80 USD in 1 year or 1.5 years (which is the length of time if would take to review and implement systems anyway) – then the price competitiveness gap falls, and overseas retailers are no longer as competitive. We have effectively wasted millions – if not billions of dollars – to “placate” business owners in the short-term.

    2) Margins that are applied from Australian big and small retailers are a joke. You can use applications such as RedLaser to discover the disparity between instore pricing and online pricing to see the differences between margins. If pricing was even within a 10-15% gap – then many couldn’t be bothered waiting for postage and overseas delays but it’s clearly not. Even with a 10% GST slap on overseas goods, local retailers aren’t even close because they are high margin businesses. Change the servicing attitudes of staff in store and become more price competitive for consumers to more adequately shop locally.

    3) It’s anti-competitive. You are effectively wanting a taxation scheme to force overseas retailers to stop servicing Australia. This is exactly the aim and this is exactly what it will achieve because most businesses will not want to have to keep track of deliveries to Australia [if this is how the scheme is implemented]. This means large organisations like Amazon won’t ship to Australia if the cost is implemented onto them and they are expected to keep track of taxation. When the USA economy recovers and the dollar looses strength – you have now made international shopping useless.

    You need to “look closer to home” for problems rather than blaming current economic factors and attempting to force policy change to solve problems. Everyone just wants competitive pricing and good customer service – both which are significantly lacking in many retail stores in Australia. Further, the pricing margins that local businesses attempt to force onto consumers is a joke – even buying ONLINE in Australia is cheaper than most bricks-and-motar stores.

    The application of a GST-tax doesn’t solve anything because even with a 10% addition – pricing is still cheaper – so the only thing is does is placate proponents like you, during boom economic times but costs Australian tax payers billions to implement and manage a system that will ultimately reduce the competitiveness of the Australian online landscape.

    • I agree with all your points. its not a silver bullet. Removing the exemption won’t “save” Australian retail. it won’t stop people buying online or buying from overseas. it may not even be economic for the Government to implement.

      But that’s not the issue. The issue is that it is not fair. it is not fair that an Australian business selling an identical item should have to add 10% to their retail price and a US business does not.

      It is so blatantly inequitable. Retail in Australia is suffering from a high dollar, driven by high interest rates (compared to trading partners) in turn driven by fiscal stimulus and a resources boom. All of that is unfortunate for retail, but fair. Having to add 10% when offshore competitors do not, is not fair.

      • Of course it’s not fair, but that’s not really the point. Nobody said life was meant to be fair.

        We pay taxes to help the government, not to help local retailers. It’s the government’s prerogative to decide if it wants to collect taxes on any particular products or service. If the government believes it’s not worthwhile to collect GST on overseas purchases < $1,000, then why is it the responsibility of local retailers to "campaign" for it?

        I understand that the UK charges VAT on purchases as low as £18, and other countries also charge their equivalent of GST on purchases much below $1,000 as well, but as the retailers keep telling us: Australia is not other countries. If it was, then we'd be paying the same as everybody else for the same products. If retailers can't match prices overseas, then why would you think the government can collect taxes as efficiently as other countries?

  3. Why is it only relevant to retail? Service providers have been competing with overseas providers for years, and there isn’t any concern about their businesses. I.e. if you purchase indian based programming or european design services, or virtual office services you are not paying them GST.

    The argument just doesn’t hold water in my opinion. Service businesses still exist and have had to develop value based businesses not just to compete on price. The models starting changing for better or worse about 10 years ago.

    What needs to happen is that government and business need to accept the globalisation path is well and truly underway. Many businesses have used it to their advantage.

    • I never thought of that… and in fact I DO run a service-based business, doing freelance software development work for companies in Australia and overseas. Yes I have to charge GST to Australian customers and yes my rates are 10 times what you’d get if you hired an Indian company for a similar job.

      The difference is, and the reason people are actually willing to pay 10 times what they’d pay an Indian company is the added value I provide on top of the basic programming service. The idea that you get what you pay for is something people are quite familiar with, and they are prepare to pay extra if you actually provide value relational to that additional cost.

      But if I can go online, buy the exact same thing, get it delivered directly to my home, read all the reviews I can find, then what reason do I have to pay twice as much to buy from a bricks-and-mortar store?

      As a small business owner, I can say with confidence that I have no problem with the GST being applied to the services I provide and not to those provided by overseas companies, even if those services as < $1,000. An added GST is really not going to make much difference anyway.

  4. Since this issue has blown up I have been noticing more friends hunting for OS bargains. People who always downplay the benefits of shopping online are bragging to me about what they found.

  5. Bloch claimed that while small retailers had taken advantage of the internet in Australia, they were disadvantaged by the disparity in price, compared with overseas rivals — which he said was “a direct result of the unequal Australian tax regime”

    If that were the case, the disparity would be 10%. It is not.

  6. Jeez Larry – how much tax do you need on your overseas competitors until you are effectively subsidised? 200%?

    Unfortunately you come across as a gas lighter luddite – while you and your retail mates have been quietly gaming us Australian consumers we’ve figured out your game now and playing ourselves. Either get relevant to Australian consumers again or find a new job (dunno how but apparently you’re a domain name specialist so you should be able to figure it out).

  7. Larry,

    Stop trying to increase your profit margins and overcharges. The whole reason behind this is HN is not liking their profit margin being reduced from 100% to 50%!

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