Retailers Should Request Rba Help Not Gst Help
Retailers who have been continually asking for the federal government to change the
GST legislation should review their argument and instead ask the Reserve Bank of Australia RBA to look at reviewing their monetary policy either print more money to devalue the AUD or to consider lowering interest rates to stimulate spending.The ongoing requests from major Australian department stores such as Harvey Norman, Myer, David Jones, and others who are quoted in report after report in the main news outlets stating that the GST not being charged on imported items under $1000.00AUD is hurting their business immensely. The truth is that collecting GST on these items costs more than it delivers and even if collecting the tax was financially viable the retailers need to understand that it wont solve the overseas sales issue for them.
The high value of the Australian dollar is a far bigger nuisance to local retailers. For example, if pair of Nike Free Run 3 runners are sold in the USA on eastbay.com for $99USD, and with shipping can be at your Australian residence for $124.00USD including shipping even adding 10% bringing the price to $136.40USD it close enough to the $160.00AUD retail charged by local sellers like The Athletes Foot. Especially as the current AUD is worth $1.04 to $1USD the real comparison of buying from the USA to Australia is that even if GST was collected from overseas sales this pair of shoes is still nearly $30 cheaper from overseas. The obvious downside is the returns and service offerings arent as good as local providers.
So if on Tuesday the RBA lower interest rates the current relatively high local rates to overseas will not be as attractive as an investment option for overseas investors and will reduce the value of our local currency. The other effect of lowering the interest rate will be to hopefully stimulate spending, getting the consumers back to the local tills of retailers spending the savings. This is only the small part of what the RBA could do and in reality is a bit gamble for retailers to ask for and hang their hopes on as reality will be our interest rates are still comparatively high, and banks are slow to pass on savings, plus living expenses are currently quite high in Australia, so any actual money extra in a consumers pocket will likely be saved.
However the additional tool the RBA have at their disposal is the ability to print more money, or sell more dollars than usual to other countries and investors. This action will devalue the dollar and will help local retailers see some reduction in money being spent overseas. The RBA could even go a step further and actively talk down the AUD as an investment tool being utilized currently by overseas hedge funds. The high Australian dollar is great for imports, and those going overseas but tough on exporters and local retailers. The potential actions by the RBA next Tuesday may give Australian based retailers some welcome stress relief ahead of Christmas.
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