The GST Overseas Retail Battle

- September 25, 2012 2 MIN READ


As fashion designers we are always interested in the changing world of retailers. It is important to always be on trend and keep up with advancements, technologies and ideas, but do these tactics push the boundaries, do these cost effective strategies go too far and what is the cost to the retailers and the consumers?

This week we talk about the issue of whether overseas retailers should have to pay GST and the move from some local retailers to set up overseas accounts in order to bypass having to pay GST on Australian goods.

Currently the government does not charge GST on purchases under $1000 as they argue that it would cost more to collect the tax than revenue would raise. Once again the Australian local designer is fighting an uphill battle to compete against these overseas megastores. In response Australian retailers have capitalized on this idea setting up shop in countries like Hong Kong in order to bypass the tax they would have to pay to the Australian Government.

Prolific Australian retailer Harvey Norman is one of the strongest opponents to Australian retailers setting up overseas account. When commenting on the new trend he states “How un-Australian is that? I think that’s just the worst thing that an Australian company could do. If Harvey Norman did that, everyone else would follow, and it’s wrong.”

As a boutique owners and designers of a small label we can see how it could be attractive to reduce cost in these ways, but ultimately you have to make a decision on what you feel is right and what is wrong. The GST contributes to health, education, infrastructure, roads and much more. It is our tax structure, it has worked so far and I think we live fairly comfortable lives because of it. Unlike countries like China and India we live in a land of middle class and relative equality whereby we charge tax to the richer and give support to the less well off. It may not be the American Dream but it’s the Australian way and we like it.

We also ask ourselves where does it end? Should we re-introduce slave labour or perhaps cook the books and set up accounts off shore. Maybe we should exploit workers, pay employees cash on the sly or maybe we can just cut costs on not double stitching those seams. It may seem a bit extreme but ultimately the way in which you conduct your business is a reflection of you and your morals and we live by those everyday.

Designers should base their clothes on innovative, quality and design. They should add value with customer service, follow up and offer a unique experience ensuring customers will come back time and time again. Not by cutting costs and finding loopholes to avoid tax. This would be a sad day for Australian retailers if we all decided to follow this lead.  What do you think?