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Kilgariff warns of parcel tax impact on freight efficiency

ALC fears likely Federal Government moves to tax low-value imports may hurt supply chain efficiency if not handled carefully

November 28, 20113

The Australia Logistics Council (ALC) has voiced its concern that likely Federal Government moves to tax low-value imports may hurt supply chain efficiency if not handled carefully.

The call for care on adding GST to goods worth under $1,000 comes as fears have been raised at the possible impact of expected moves to increase import processing charges for goods above $10,000.

“Any changes to the GST threshold for online purchases need to be thoroughly thought through and analysed before being implemented because of the likelihood of extra costs being imposed on the freight logistics industry and therefore consumers,” ALC Managing Director Michael Kilgariff says.
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“Any increase in the number of parcels requiring clearance and processing would increase the costs of processing and reduce productivity.
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“While some potential costs could be ameliorated with the greater introduction of automation, ALC is concerned at the prospect of the costs associated with this reform outweighing the benefits for the Australian economy. ? ?

“The implementation of a low (or zero) GST threshold would have a significant impact on the operations of the freight logistics industry, particularly if industry members were required to take on added GST collection responsibilities.

“The Australian logistics industry represents 14.5 per cent of GDP with significant flow-on effects in the Australian economy and in this case it should not be regarded as simply an extension of the Australian Tax Office.” ? ?

Kilgariff believes the business case being developed must address these issues if it is to have support from the freight logistics sector. ? ?

The potential changes come on top of new requirements for the freight logistics industry to fund new capital equipment to meet the costs of enhanced air-cargo security requirements. ? ?

“If extra screening obligations are going to be asked of the freight logistics industry to enhance air cargo security and tax collection arrangements, government assistance should be provided for capital upgrades,” Kilgariff says. ? ?

“In the first instance, the Government should reconsider providing $19.6 million that was originally earmarked by the former government but was subsequently reallocated without being spent.”

Kilgariff says the funds were intended to help industry buy s]equipment to meet new air cargo security arrangements.

“In light of these concerns, ALC would expect any proposed changes will be preceded by a rigorous regulatory impact statement to assess the costs associated with lowering the GST threshold for online purchases,” he says.

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