MELBOURNE, Australia (BRAIN)—The Australian government is backing the cycling industry’s attempts to lower an import tax threshold that some say is threatening the viability of brick and mortar bike shops. But, the industry is pushing for the government to act quickly before competition from online sales puts brick and mortar shops out of business.
The country’s productivity commission released an economic report late last week recommending the low value import tax threshold be lowered to reach tax neutrality. Right now, the government collects a 10 percent tax on all products imported with a value higher than $1,000. Trade organization Bicycle Industries Australia says that has spawned an influx of competition from international Internet retailers pricing popular groupsets and other parts just below the threshold to avoid paying import duties, creating unfair competition for shops.
While BIA supports the report’s recommendations, which also calls for a taskforce to examine parcel processing at customs and the establishment of a Retail Council of Australia, the organization is concerned it will be a case of too little, too late.
“This is an opportunity for the government to support Australian retail jobs,” said David Cramer, chairman of Bicycle Industries Australia. “It can take the report’s recommendation that it needs to lower the threshold and establish a taskforce, which will take another year to examine the issue again. Or it can realize that the longer it takes, the more jobs are at risk. We urge the government to make the decision to lower the threshold now.’
The combination of tax breaks to foreign retailers along with the costs associated with meeting Australian regulations adds significant extra costs to the purchase price of retail goods within Australia, directly putting Australian jobs at risk, he said. As one example, Cramer cited government d imposed taxes and duties drive up the cost of bike sold in Australia by up to 40 percent compared to foreign counterparts. “Our research shows purchases from overseas retailers are already 16 percent of credit card and EFT/POS transactions in our industry—this figure has doubled in the last year alone,” he added.
The report, penned by assistant treasurer The Hon Bill Shorten MP, also highlighted the opportunities for the bricks and mortar retailers to expand into online retailing in order to compete, but that conflicts with the government’s decision last year to withdraw a $15 million to support small businesses wanting to move into online retailing, Cramer said.
The tax threshold issue is ongoing. The report calls for the government to form the taskforce as soon as possible and set a timetable of reporting in 2012.
—Nicole Formosa nformosa@bicycleretailer.com
