By Claire Reilly
SYDNEY, NSW: Internet retailing entrepreneur Ruslan Kogan has said that retailers should “adapt and innovate” rather than pushing for “government protectionism” by calling for the lowering of GST thresholds on Australian imports.
Kogan spoke exclusively to Current.com.au, following reports this morning from the Fair Imports Alliance that the government was planning to lower the GST threshold on imports as early as October last year.
The FAI obtained documents through freedom of information laws that it claims indicate the Federal Government was planning to lower the GST threshold from $1000 to $500. The issue has continued to stir debate, with retailers calling for an inquiry by the Productivity Commission earlier this year.
Kogan said he opposed any reduction in the threshold.
“We would much rather see the government come out and say ‘We’re going to remove GST on all products under $500 in retail stores in Australia to make it an even playing field’. We would rather see a reduction in taxes across the board, rather than an increase in taxes in some areas.”
In addition, he was scathing in his indictment of the push by retailers to have the GST threshold lowered.
“We certainly didn’t like what was going on earlier this year with the GST debate,” said Kogan. “What we saw was a whole bunch of retailers screaming for government protectionism, rather than looking for ways to innovate and take their business to the next level.
“These are retailers who over the last 10 or so years have been saying, ‘Online retail is not a threat, we’re never going to go online’. What they’ve very quickly realised is that the business environment is constantly evolving, and those that don’t innovate to keep up with it can’t expect to see profits that they saw ten or twenty years ago.
“We live in a global economy, that’s been very clear for years now, and these retailers have to catch up,” he said.
“Whether you deny the reality and keep thinking ‘no that doesn’t exist’, reality always prevails. And that’s how the retail industry is.
“The beautiful thing is that as you allow more and more competition, people will innovate and create better business models that succeed – it’s ultimately better for the consumer. Adapt and innovate. Use your commercial muscle rather than your political muscle. Stop asking for protectionism and extra taxes to make an ancient business model successful in today’s age.”
Whether or not the threshold is lowered, Kogan said it would not have an impact on his business.
“It will extend the lifeline for these antiquated businesses by a year or two, and they might think their business model is actually better than it is for a year or two. But inevitably the truth prevails.”
UPDATE: Current.com.au contacted a number of retailers for comment on the reduction of the GST threshold on imports, including Pierre Boutros, CEO of online electronics store Millennius.
Boutros said, “The GST threshold going to $500 is a good idea to stop people buying overseas, although I still don’t think it will matter to most, as they will still get a cheaper purchase.”
“Will it affect me? No it won’t, as we order in bulk and are well over the $500 and $1000 mark – we always pay GST on our orders.”