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GST on imports: plumbing new depths in stupidity

I thought the Backpacker Tax was the high watermark of brain-dead macroeconomics, but it turns out this government is capable of anything, and not in a good way. So just how stupid is this proposal to apply GST to privately imported goods purchased through international sellers? Let me count the ways:

  1. So much argy-bargy, so little money. This is something that the GST on Imports shares with the Backpacker Tax. It raises such a pathetic amount of money it is simply not worth bothering with. This policy is expected to raise $300M over 4 years. That’s $75M per year. To put that in perspective, the federal government expects to collect $63B (that’s Billion) in GST in FY2017/18. So this sop to the Gerry Harveys of the world is worth just 0.1% of GST. And that’s before we even discuss the cost of implementation.
  2. So little jurisdiction. The federal government does not have the power to levy taxes in foreign countries. It is completely unclear how they think they can impose this tax on companies that have no presence in Australia. I can easily imagine a scenario where unscrupulous sellers collect the GST when selling to Australian customers, and quietly trouser it. What’s to stop them?
  3. So little business acumen. How much is it going to cost to collect this tax? Currently any import of less than $1000 in value is not subject to GST, because it is not worth the while of Customs, the Post Office, the Tax Office or any other agency to recoup the money. Now it’s feasible that the cost of recoup has gone down since that decision in 1999/2000 (when the GST was first implemented). Perhaps the threshold should be reevaluated, but removing it completely? How can it possibly be cost-effective to recoup GST on a $4 parcel from Hong Kong?
  4. So little business understanding. This GST collection is supposedly going to be imposed on Ebay. That shows that the government have no concept of how Ebay works. You don’t actually buy anything from Ebay. Ebay is a marketplace that brings buyers and sellers together. When you buy something on Ebay, you pay the seller directly. The seller is charged by Ebay for their use of Ebay’s service. To suggest that Ebay are liable for the GST is like saying Westfield should pay the GST on behalf of their tenants.
  5. So little so late. This policy is well past its use-by date. Joe Hockey first proposed it. Back when he was Treasurer, the $A was buying $US1.10, and that made foreign goods pretty attractive. Now, the dollar hovers around $US0.73, which has put the handbrake on private imports in a big way. Even if this policy was a good idea when it was first broached (and it wasn’t), you would still have to ask the question whether there’s any continuing need for it.
  6. So little fiscal necessity. There’s not room in this post for the full MMT discussion, but taxes don’t fund spending. The government does not need this money, regardless of whether it’s the pitiful amount under discussion or some massive chunk of cash. This policy simply trims the public’s purchasing power by 10% when privately importing goods and services. It in no way changes the government’s ability to fund services or people.
  7. So little consistency. This government have made a great virtue of their “repeal of red tape”. It would seem that small government, light-touch “invisible hand” leave-it-to-the-market philosophy doesn’t apply when we’re talking about big donors like Gerry Harvey.

That’s seven reasons why GST on imports is bad policy off the top of my head. No doubt there are more. I can’t see any angle from which it makes the slightest economic sense to implement this policy, unless you’re Gerry Harvey.

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Christian Porter is a Numpty

In this rather depressing story, a 21 year old kid on the autism spectrum was chased by debt collectors from Dun & Bradstreet, having been caught in the dragnet of Centrelink’s controversial Tax Office data mining process.

Luckily for him, he (a) mentioned it to his mum, who (b) just happens to be the head of Autism Awareness Australia. So his folks could intervene. But this post is not about the story of Jack Roberson’s treatment, appalling as it is.

No, I’m worked up about this:

The government continues to defend the system. The social services minister, Christian Porter, said on Tuesday it was working “incredibly well” and gave individuals a fair chance to respond when discrepancies were detected.

‘What you’re saying to me is that if people over-respond, or if people find it inconvenient, then the response to that from a government should be to not do it,’ Porter said.

‘Now, if we don’t do it, that is $4bn worth of taxpayers’ money that got wrongfully paid that can never be recouped.’

Wow. That’s some industrial-strength stupid. Where does Mr Porter think the money goes? After the welfare recipient gets it, what happens next? Think!, Mr Porter.

Here’s a tip: the recipients spend it, so most of it becomes someone else’s income, and the rest returns to the government as GST. And then that person spends it (again, GST), saves it or pays their taxes with it. And so it goes around and around, until it’s all drained away either as GST or payment of taxes.

The idea that it must be clawed back from the most vulnerable – who don’t have it any more anyway – shows such paucity of vision and lack of understanding of the economy you really have to wonder where the coalition get these numpties from.