Michelle Grattan, University of Canberra

THE GST exemption for imported goods and services purchased for less than $1000 will be scrapped from July 1, 2017 – or possibly earlier.

Federal and state treasurers on Friday finally ticked off on the long-discussed move to crack down on online imports. At budget time the federal government released a draft bill to extend the GST to cross border supplies of digital products and services imported by consumers from July 2017.

It used to be considered too difficult administratively to put the GST on online purchases but Treasurer Joe Hockey said there was now enough international agreement to make it practical.

The tax will be collected via a vendor registration model, which means goods would not have to be stopped at the border, making for a relatively low administration cost.

Overseas suppliers will collect and then remit the tax for both digital products and goods. Only sellers with an Australian turnover of $75,000 will need to register and charge the tax. This is the same level for registration within Australia.

All the extra revenue collected will go to the states. The government has not put a figure on this but Hockey expected it would grow over time as more companies signed up to collect the tax. Australian officials will travel abroad to bring in firms.

Hockey stressed that the move was particularly directed to levelling the field for domestic producers. “The low value threshold has had a negative effect on Australian jobs and Australian businesses,” he said.

Although at one stage there was thought of having a very low threshold, such as $20, the threshold will go altogether.

Hockey said that if arrangements could be made earlier, the removal of the exemption would be brought forward.

He denied the decision broke the Coalition’s promise not to alter the GST this term, saying it was an ‘“integrity” measure, was set to start after the election, and was endorsed by all states and territories.

Hockey was saved from his costly spur-of-the-moment promise, made on the ABC’s Q&A program, to review the GST on sanitary products by some jurisdictions disagreeing with it. All states would have had to support the removal for it to happen.

The treasurers also canvassed broad reform options, and the pros and cons of various approaches, as the federal government works on its tax white paper.

“In consultation with the states and territories, the Commonwealth will further develop the options discussed by the treasurers, including packages involving changes to the Medicare levy or a change to the GST,” a statement issued by the treasurers after the meeting said. The Commonwealth is to report back to the states in October on options for tax reform.

“The states, territories and Commonwealth will continue to work towards a comprehensive solution,” the statement said.

Michelle Grattan is Professorial Fellow at University of Canberra

This article was originally published on The Conversation. Read the original article.