Myer SEZ no-more GST

The recent rise in the Aussie dollar (especially the psychological fillip that was our brief flirtation with parity with the US$), has drawn a lot of attention to the effectively tax-free status of purchasing online from offshore vendors.

Indeed, Australia’s most outspoken retailing billionaire Gerry Harvey has been calling for imposition of the Goods and Services Tax (GST) on all such purchases (the Tax Office sensibly warns that pursuit of last revenue from these transactions would be mightily onerous).

But, with Aussie department store giant Myer indicating it is looking to launch an online site based in China to retail goods to Aussie online customers the war has moved beyond rhetoric. Myer will be turning the rest of world into an effective Special Economic Zone relative to the bricks and mortar land of Australia.

It is also intriguing that Myer are reportedly partnering up with a government-owned entity in Australia Post to facilitate this duping of the Australian Tax Office (and thus denying the Australian government revenue).

As for business model itself, it is far from ideal in terms of economies of scale etc, as instead of shipping goods from China in bulk via containers to Australia, the goods would be mailed (most likely by air, but possibly by ship) individually.  But as long as those postage costs do not exceed 10 percent (the typical GST rate imposed) of the instore price in Australia, there is a pretty good incentive for Aussie consumers to consider the offer.

One final aside, it will be an interesting test of the much-espoused hostility of some consumers to ‘foreign goods’ to see how consumers react to such an unavoidable acknowledgement of the source (China) of so many consumer products.

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