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senate vote 2017-06-19#2
Edited by
mackay staff
on
2017-06-23 00:09:36
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Title
Bills — Treasury Laws Amendment (Gst Low Value Goods) Bill 2017; in Committee- Treasury Laws Amendment (GST Low Value Goods) Bill 2017 - in Committee - No GST on sanitary items
Description
<p class="speaker">Katy Gallagher</p><p>by leave—I move amendments (1) through (4) on sheet 8153 together:</p><p class="italic">(1) Schedule 1, page 24 (after line 35), after item 53, insert:</p>- The majority voted against a [motion](http://www.openaustralia.org.au/senate/?gid=2017-06-19.18.1) introduced by Greens Senator [Larissa Waters](https://theyvoteforyou.org.au/people/senate/queensland/larissa_waters) (Qld), which means it failed. The motion would have made sanitary items exempt from GST, meaning no GST would be charged on these products.
- ### Motion text
- > *(1) Page 27 (after line 16), at the end of the Bill, add:*
- > *Schedule 2—Exemptions*
- > *A New Tax System (Goods and Services Tax) Act 1999*
- > *1 At the end of Subdivision 38 -B*
- >> *Add:*
- >> *38 -65 Sanitary products*
- >> *A supply of *sanitary products is GST-free.*
- > *2 Section 195 -1*
- >> *Insert:*
- >> *sanitary products means tampons, sanitary pads, panty liners and similar items.*
- > *3 Application*
- >> *The amendments made to the A New Tax System (Goods and Services Tax) Act 1999 by this Schedule apply in relation to supplies made on or after 1 July 2017.*
<p class="italic">53A At the end of Division 177</p><p class="italic">  Add:</p><p class="italic">177 -20 Review of provisions relating to offshore supplies of low value goods</p><p class="italic">(1) By the day after this section commences, the Productivity Minister must, under Part 3 of the <i>Productivity Commission Act 1998</i>, refer to the Productivity Commission for inquiry the matter of the amendments to this Act made by the amending Act, including:</p><p class="italic">(a) the effectiveness of the amendments; and</p><p class="italic">(b) whether models for collecting goods and services tax in relation to *offshore supplies of low value goods other than the amendments might be suitable (including evaluation of the effects of the models on Australian small businesses and *consumers); and</p><p class="italic">(c) any other aspect the Productivity Commission considers relevant to the implementation of the amendments.</p><p class="italic">(2) In referring the matter to the Productivity Commission for inquiry, the Productivity Minister must:</p><p class="italic">(a) under paragraph 11(1)(a) of the <i>Productivity Commission Act 1998</i>, require the Productivity Commission to hold hearings for the purposes of the inquiry; and</p><p class="italic">(b) under paragraph 11(1)(b) of that Act, specify the period ending on 31 October 2017 as the period within which the Productivity Commission must submit its report on the inquiry; and</p><p class="italic">(c) under paragraph 11(1)(d) of that Act, require the Productivity Commission to make recommendations in relation to the matter referred to in subsection (1).</p><p class="italic">Note: Under section 12 of the <i>Productivity Commission Act 1998</i>, the Productivity Minister must cause a copy of the Productivity Commission's report to be tabled in each House of the Parliament.</p><p class="italic">(3) The Productivity Minister must not withdraw the reference before the Productivity Minister has received the report.</p><p class="italic">(4) For the purposes of paragraph 6(1)(a) of the <i>Productivity Commission Act 1998</i>, the matter mentioned in subsection (1) is taken to be a matter relating to industry, industry development and productivity.</p><p class="italic">(5) In this section:</p><p class="italic"> <i>  amending Act </i>means the<i>Treasury Laws Amendment (GST Low Value Goods) Act 2017</i>.</p><p class="italic"><i>  Productivity Minister</i> means the Minister administering the <i>Productivity Commission Act 1998</i>.</p><p class="italic">(2) Schedule 1, item 65, page 27 (line 5), omit "1 July 2017", substitute "1 July 2018".</p><p class="italic">(3) Schedule 1, item 65, page 27 (line 6), omit "1 July 2017", substitute "1 July 2018".</p><p class="italic">(4) Schedule 1, item 65, page 27 (lines 9 and 10), omit "1 July 2017", substitute "1 July 2018".</p><p>I did go into this in some detail in my speech during the second reading, but Labor is proposing these amendments basically to deal with the mess that would be otherwise created if the Treasury Laws Amendment (GST Low Value Goods) Bill 2017 were to pass unamended.</p><p>These amendments are really about trying to provide the best possible outcome for Australian consumers and retailers. They go to dealing with the issues and concerns that have been raised since these new arrangements were announced and indeed through the Senate process. It is largely around the government's proposed vendor model—how complex and costly it would be to administer—as well as the potential unfavourable impacts on consumers, with the cost of the implementation of this model being passed on, and other issues surrounding compliance, and I think we heard Senator Macdonald raise some of those during the second reading debate this morning.</p><p>The amendments the opposition is moving today are really to delay the commencement, firstly, by 12 months, to 1 July 2018. I think it is just inconceivable that the arrangements are in place for low-value goods to be subject to GST within the next 10 days. I do not think anyone is pretending to believe that is actually the case. So, this would deal with that problem which is looming before us. It would also allow for a short Productivity Commission inquiry into the legislation's proposed model of GST imposition on low-value imported goods and other, alternative models, with a short inquiry to report by 31 October 2017, which would allow, again, the time to be provided both to the government and to this chamber or the parliament if there are further issues prior to the commencement of the arrangements on 1 July 2018. These are very important amendments—people genuinely want to see GST being levied on low-value goods, but in a responsible way that will not create chaos.</p><p>Can I just respond briefly to comments that Senator Whish-Wilson made in his second reading contribution around the fact that whatever this Productivity Commission's findings might be they are not binding, and there is no commitment that changes would be made. When you look at the amendment we have drafted, it would be a very brave government that would ignore any findings or recommendations from the Productivity Commission about the imposition of these arrangements. That is why we have put them in as we have. We think that will assist the government and, more importantly, these amendments will responsibly deal with a problem that has really been all of the government's own making and try and put in place a reasonable way forward for a principle that we support but an implementation we cannot support. They will deal with those very significant concerns. Even though they do delay these arrangements until 1 July, we are convinced there is no other way to clean up the government's mess.</p> <p class="speaker">Ian Macdonald</p><p>I am inclined to agree with the substance of the amendments that are being proposed. I was a member of the Economics Legislation Committee that looked at this in some detail. Some of the concerns that have been raised by Senator Gallagher were raised in that committee hearing. The committee, in its wisdom I think, unanimously recommended that the legislation be delayed for 12 months because, as Senator Gallagher said, it is almost impossible to expect people to get ready in the next couple of weeks to implement the arrangements. There does seem to me to be some merit in having a closer look at the issues.</p><p>This is a bill that must pass at some stage. I will not repeat what I said in my speech on the second reading, but it is important for small business, for Australian retailers, to have the playing field levelled so that competitors who live overseas do not automatically get a 10 per cent benefit on the sale of goods in Australia. The legislation is essential. As I said before, it is long overdue. I am sorry that supporting the delay for another year will mean another year that Australian retailers will have this unfair competition, but I do not see any other way.</p><p>I did want ask the minister, as I foreshadowed in my speech on the second reading, to again explain why the vendor model was preferred over the logistics model, bearing in mind, as I understand it, that the logistics model is already in place for goods imported into Australia of over $1,000 in value. If that is the case, wouldn't it be ever so much more simple just to extend that to goods under $1,000? Quite frankly, I understand that these days—I have not been involved in this—you press a button on the computer and it does it all. You press a button and it collects the money; you press another button and it sends it to the Australian government. I just cannot understand where the problem is, so I ask the minister why the vendor model was preferred over the logistics model, which common sense would tell me is better. Could the minister also comment on the things that, again, I mentioned in my speech on the second reading—that the logistics model would return $1.8 billion in revenue, whereas according to Treasury the vendor model will only return $300 million. Also, could the minister comment on the issues, as I understand them, that Treasury have calculated that by the time the whole scheme is rolled out the compliance will be only 54 per cent under the vendor model. I would be interested if the minister could mention those. That is the only part I will take in this debate. I am inclined at this stage to support the amendments being proposed by the Labor Party.</p> <p class="speaker">Mathias Cormann</p><p>I thank Senator Macdonald for his contribution. Let me, on behalf of the government, indicate right at the outset that the government does not support this amendment. This issue has been reviewed many times over the years. All of the various collection models have been thoroughly assessed over the years and the government's judgement is that the vendor collection model is the most appropriate model to collect GST on low value goods as it takes into account who has the information to determine GST liabilities and prevents goods being held up at the border. The vendor collection model has been agreed to by the states and territories, as it is the most appropriate model to collect GST from overseas multinationals and to level the playing field for Australian businesses. Obviously, we will be concerned if the Senate were to vote to delay the implementation of this requirement. The advice that the government has in front of it from the relevant agencies is that the government is ready to administer this from 1 July 2017.</p><p>Let me also say in relation to the vendor collection model that it is assessed as the most efficient and cost-effective model, which is why Switzerland, for example, has announced legislation to require vendors to collect GST of value added tax on low value imports from 1 January 2018. Within the European Union, vendors are already required to charge and collect GST on sales within the European Union. The OECD and the EU are also focusing on taxation of goods by the supplier at the point of sale. It is also important to note that the vendor collection model has already been used to collect GST on cross-border digital products and services, and this is the case in countries such as Japan, South Korea, New Zealand, member states of the EU, Switzerland, Norway, South Africa and, from 1 July 2017, Australia.</p><p>We did consider the alternative of the logistics model whereby transport companies charge and collect GST. This model could provide a high level of coverage but it would also be very expensive to implement. Currently, transporters are removed from the point of sale and do not have complete information to assess the GST payable. This model would require the transport intermediaries as well as every vendor they deal with to provide additional data on the taxable or exempt nature of goods, as well as the consumer or business status of the importer, to calculate the GST. An important point in this context is that, according to the Department of Immigration and Border Protection data for 2015-16, more than 33 million consignments came into Australia with a value of less than $1,000.</p><p>In relation to the specific question that Senator Macdonald asked about evidence by some stakeholders that the logistics model would deliver higher revenue, Treasury's view is that the administration costs associated with collecting GST on the logistics model are likely to largely offset the amount of GST revenue collected, even if the collection model generates greater participation and compliance. For example, Australia Post, in their submission, stated that they would require an estimated $900 million per annum to support a logistics collection model, which would completely offset KPMG's estimate of the potential revenue. The main issue with the KPMG analysis is that it does not account for the differences in administration costs under each collection model. As I have indicated, for these reasons the government will not be supporting these amendments.</p> <p class="speaker">Ian Macdonald</p><p>Sorry, I said that would my only participation. I have one final question. Minister, I hear what you say about the logistics model, but why doesn't that already apply to goods above $1,000?</p> <p class="speaker">Peter Whish-Wilson</p><p>That is my question, too.</p> <p class="speaker">Ian Macdonald</p><p>Okay. I will save you asking it. If it works for goods above $1,000 and the end of the world hasn't come then, quite frankly, I do not mind if it does add a little bit of cost to the importation of goods, because, again, that suits the main issue I have with this bill in that it makes Australian retailers that bit more competitive against foreign imports by mail or otherwise. It does not worry me that it makes things a little bit more expensive; it does help the retailers.</p><p>If you walk down any street of any town in Queensland, you will see many retail shops vacant. One of the reasons given to me by people who used to be in those shops is that they simply cannot compete with the items coming in from overseas, for many reasons; the first of which is that their customers pay 10 per cent more than those same customers would pay if they ordered it online from overseas. Those customers get the good—I am told—in two or three days, because the logistics companies are so good these days at getting the goods to your door. That efficiency is quite remarkable. I struggle to find how those logistics companies would then find it at all difficult to collect and disburse the 10 per cent. This will be my last question: if it is okay for another thousand dollars, why not below $1,000?</p> <p class='motion-notice motion-notice-truncated'>Long debate text truncated.</p>
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