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John Passant

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Tax the rich retailers, not us

Rich retailers like Gerry Harvey are running a campaign to get the Labor Government to impose tax on goods we buy from overseas over the net.

Isn’t it funny that the low tax brigade want more tax when it suits them? The free marketeers don’t like the free market when it cuts into their profits.

The Global Financial Crisis has put a brake on working class spending in Australia. That, and the massive increase in the share of the national cake going to profit at the expense of labour, the longest unpaid working hours in the Western world and increasing interest rates.

Workers have begun buying more and more goods over the net from offshore. The strength of the Australian dollar makes this cheaper than in the past.

Goods imported from overseas for less than $1000 aren’t subject to Goods and Service Tax or customs duty. (For international readers the GST is Australia’s equivalent of a regressive value added tax or consumption tax).

The retailers want the GST to be imposed on imported goods worth $400 or more.

These retail giants are rent seekers who in the past have benefited from  Australia’s isolation. The net is breaking down that consumer isolation. 

So the big Australian retailers, who buy most of their goods offshore in bulk and pay much less in effective transport cost than individual purchasers,  can’t compete with someone like me sitting at my computer buying goods from the US or Europe and paying their taxes and the transport costs on top of the purchase price?

Maybe the retailers should cut their prices. Oh, but that would cut their profits. So they want to use the tax system to protect their profits.

Their push if successful would result in us paying more tax to prop up their profits. I have a novel suggestion. Tax them, not us.

Now the main mouthpiece for the rich retailers, Gerry Harvey, has begun sprouting nationalism. It is ‘unAustraian’ to buy online. Apart from the hypocrisy – where does his store Harvey Norman buy most of its stock from? – his argument is nationalist claptrap designed not to protect Australian jobs but to protect his profits. 

Harvey doesn’t give a toss about our jobs or our living standards. Least of all does he care about his own workforce.The big retailers don’t employ enough staff to service customers adequately. They pay those they do employ a pittance.  Retail workers – overwhelmingly women – are among the lowest paid group in Australia.

But to employ more staff and to pay them more would eat in the precious profits of the retailers. 

And of course if we can buy retail goods more cheaply offshore that leaves us with more money to spend and boost the economy. 

This is a preemptive strike by retailers to both excuse their unprofitable Christmas season and to stop the trend of online shopping growing. While at the moment only 3 percent of purchases are made online (and half of them are of Australian goods) the retailers’ campaign is likely to increase that figure as they let more and more of us know of the value of online shopping.

The GST is a regressive tax. It takes more out of the income of average workers than it does out of the earnings of the rich like Gerry Harvey.

It is about taxing us more to pay for tax cuts for them. Instead of increasing GST on some goods, we should abolish it and tax the rich to make up for the shortfall. Shift the tax burden on to those who can afford it.

Gerry Harvey and the other retailers are very very wealthy because of us. Instead of increasing taxes on working people the time has come to tax the rich more.



Comment from Chris Warren
Time January 6, 2011 at 8:13 am

Whilst Australians continue to accept the status quo (which is capitalism), then I suppose taxing profits to fund a welfare state is a progressive policy for the Left.

However the Left should also make another call. As these capitalists call for a level playing field and for protection etc against unfair offshore competition, they should also be asked, why is there no protection for Australian wages, from exactly the same unfair offshore competition.

Australian capitalists have protected their profits by shifting much of the exploitation necessary for capitalism offshore into oppressed societies, societies with appalling social conditions.

As John notes, our capitalists (including media) are sprouting nationalistic claptrap in an attempt to direct their State (ie Gillard, Swan and co) to protect profits – not jobs or wages.

So at the same time they should be hit with the same arguments to protect incomes of working families. A barrier to trade to protect profits should also be a barrier to trade to protect workers.

However these are short-term palliatives.

The real solution is to support local workers organisations in Third World countries to lift their own incomes, to increase their share of the wealth being sucked-out of the developed world by their own capitalists.

Europe developed itself up until the two world wars by exploiting the rest of the world, and the USA developed subsequently on the back of Europes post war declines but also on multinational war and imperialism across the globe, so it is good if the rest of the world can now receive some benefit back in return.
However in the longer term, taxing profits (and similar calls) gives workers a false expectation that somehow the problems of capitalism can be solved with such reforms.

This is part of the problem, not the solution.

Comment from Catching up
Time January 6, 2011 at 10:43 am

The big retailers have not been concerned for the previous workers in the manufacturing industry over the last thirty odd years. They destroy many industries, especially clothing. In return they offered us poorly made and little choice of clothing for years. The same ones doing the whining now pushed small businesses out of shopping centres. They destroyed the small fruitier and butchers wherever they could. Now we are supposed to feel sorry for them. The case for GST on overseas Internet buying is overblown. The consumer and Australian on-line business has found a way to beat them. All their protesting has done is to alert the public to how poorly they have been treated. At least this year there is more choice in the dress shops but little improvement in the quality. If you are over sixty, it is near impossible to buy anything with sleeves. I, for one hate shopping in stores, going from one to the next only to find the same goods. I have found on the Internet there is a marvelous world of choice and diversity at a much cheaper price than within our big retailers. I can sit before my computer and compare prices from all over the world. I can also compare the specifications of goods. This is important with our fast changing technology. Find it impossible to find this information in stores. I, personally like to support Australian online businesses but will buy from overseas if the product better meets my needs. When we purchase from overseas, we are buying from the same markets that big retailers use. Why can we individually and pay more expensive freight and still be so far in front. I expected because of the dollar and things being bad overseas, that the Boxing Day sales prices would have been lower. I do not mind paying GST on overseas goods but the cost of the government collecting this GST would be more than the receipts they receive. What has happened is the playing field has become more level and the big boys do not like it.

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Time January 6, 2011 at 4:24 pm

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