When the wind is in their sales, nothing can get in the way of Gerry Harvey and his rich retailer mates. The moment there is a spoiler, they complain and call on the government to help.
Their current shrill campaign calling for the government to act is ill conceived and miscommunicated.
Yes, GST should apply to all items purchased in Australia regardless of whether they are supplied from an offshore warehouse or not.
Where the Gerry Harvey led campaign falls down is that Australians have no appetite for a rich head of a retail group which delivers poor customer service telling the Australian Government that they should be protected.
It is no wonder that there has been a shopper backlash against the campaign. The common thread of shopper complaints is that customer service sucks in Harvey Norman and other major retail outlets.
This is where small business excels. Small business retailers are more likely to offer friendlier and more knowledgeable customer service. Small business retailers generally live locally and hire local employees. They are better connected to the community.
A small business led campaign educating shoppers about the growing cost to their business of the free GST kick to overseas retailers would have a better chance of gaining grass-roots support and thereby engaging government in finding a solution.
The more Gerry Harvey and his rich mates are on TV complaining the more my small business retail friends can remind their customers of the difference between rich, big and bloated retailers and customer centric small business retailers.
I first published this earlier today at the Tower Systems blog. I am publishing it here as I think it is a topic which would interest newsagents.
i bought 2 ups battery backup for $250 each from garry , but ebat sell for $125 , there goes my my $250 hard earn$$$ .
will i shop at garry norm , NO WAY!!!
Help!
I’m drowning!
My heart has bled so much, I’m dogpaddling!
i laugh when i hear the radio ad for harvey norman… the local store says it prides its self on customer service….
it is a last resort for us if we need to buy anything that other stores in the area dont carry….
to be fair, jerry does keep 50% of the marketing industry employed… he is everywhere.
The whole point is why should our local retailers pay GST when the imports do not, do not lose sight of the problem because of the person pointing it out.
Luke I disagree with the sentiment but not the way the rich retailers have gone about their campaign.
Many countries from which people import have their own sales taxes.
The larger retailers are only complaining now because the dollar is so strong. What about when the dollar weakens? And what about the increased administration cost – monitoring and collecting GST on even the smallest items.
Then these is the real likelihood that charging GST wont make any difference. The savings that can be made by importing goods is often well in exess of 10%. I have a friend that imports high-end makeup and she saves between 40 and 50%.
There is also the that we live in a world economy and while the dollar is high its actually a good thing that were helping the economies who need it.
I too have shopped online, however, I hesitate to point out that many online traders (as best I can acertain) do not have to pay loadings,3 hr minimum, double time, super, and all of the accessorial add ons from statistics to visits from the miriade of Gvt agencies that small business have to bear. Might go off shore myself.
Do not lose sight of the fact that Australia introduced the GST to increase our tax base and to pay for public services (or at least that was the con job when they introduced it), like it or not.
If you are not willing to pay GST on Goods and services then stop using public services like hospitals, roads etc.
Jarryd if as you say that introducing a GST on imported goods will not make a difference then why not do it and put the cost back onto the importer like we all have to do every time we invoice in products.
I would love to stop paying a BAS at the end of every quarter because of the cost in time and money to get it done but I live and work here not overseas so it has to be done.
I do not support the big retailers but the fact is that every import that is GST free is ripping off all of us in the long run and since when is the Govt concerned about the cost of admin (see school hall, pink bats, solar panels or even chasing down Paul Hogan) they have wasted billions, it has never worried them before.
#9 – Luke = + 1
GST is charged on almost everything bar food items. How can any one NOT agree that it should be charged on imports from overseas sold on a retail basis. It is clearly a rort being abused by overseas exporters/retailers. If taxed properly it would be at a higher net rate than local retailers pay as it would be a straight 10% without input credits to offset it. If the items are sold to a wholesaler or retailer in this country they would remain exempt from GST until traded within this country.
This would level out the playing field particularly for we small retailers who pay premium rent and other costs and find ourselves swimming against the tide of low cost, GST free overseas traders. Keep in mind that if the product was manufactured here and sold direct to the public it would still attract GST so this is hurting every level of business in the country and is only the sharp end of the wedge at present. It will only become a bigger problem with time.
As for the cost of administering it, that’s another free kick for the online trader. I certainly bear that cost in my small business, why shouldn’t they? While no one has much sympathy for the national retailers it is not only the being hurt, we are all threatened by this back door retailing.
As for the argument that these online traders may pay taxes etc in their own country, that is not our problem. What is an issue is that at some point we will all pay extra tax to make up for what they avoid by trading this way. Again, it may me a minor issue now but it will grow rapidly.
overseas sold on a retail basis. If done properly it would be at a higher net rate than local retailers pay as it would be a straight 10% without input credits to offset it. This would
I’ve clearly got to much spare time toda!!!
Jarryd it is a good thing to help other countries but if it is your child gets the sack is this good and how much are the wages here $1.00 an hour in China or $6.00 as in the u s And 2 and a half per hour +9% super +4 weeks hol pay +high rent and is that not 10 % g s t on a paper ,more then i make ,i do not like the big boys but i do go along with them this time
I don’t think a GST on goods purchased overseas will slow shopping overseas. People shop overseas because the prices are considerably lower, the service fast, the range better etc… A GST on the sub $1,000 consumer imports would create a more level playing fiend and provide the government with revenue it is missing.
BrendAn,
You seem to be under the impression that the exporter will be paying the GST. This is not the case. The importer will be the one paying the GST directly to the government. The federal government will wear the administration cost.
As Mark has iterated, introducing GST wont make much of a difference. The savings being made are much greater than 10%.
A for shop-front businesses complaining about their high costs. They also face online companies based in Australia with much lower overheads. I just purchased almost $2K worth of equipment online (from Australian retailers) and saved somewhere in the vicinity of $1000+ because traditional retailers couldn’t compete. The service was great and one of the retailers even gave me a free upgrade worth $300 because the item I wanted was going to take 2 weeks to come in – i didn’t even have to ask for it.
I’m not opposed to the introduction of the GST on goods under $1000. I was just fleshing out the other side of the argument. I’m happy to pay GST on imported goods when the savings are so high.
What I am opposed to is shop-front retailers using this an an excuse to explain why they are losing business. They are losing business to online (both overseas and Australian based) because they are not competitive.
even if GST is applied. Harvey Norman is still a ripoff.
I would love to see the GST be charged on overseas purchase solely just to see what Gerry’s next excuse will be because his stores will still be overpriced.
Gerry Harvey operates franchises. His share value means pumping it up for the cause.
Have you asked your selves why someone like, lets see… Frank Lowy hasn’t entered the fray ?… on the Federal Reserve board, he can’t say much. But Hardly Normal can.
If Gerry is really suffering, then so is Frank. Obviously. But Frank isn’t allowed to be so ‘effusive’. Everyone one of those retailers making a noise, exists in a Westfield Shopping Center, except Gerry’s.
I said the word obvious before, now I’m going to type the word ‘desperate’ for Gerry.
Interesting. Didn’t hear Gerry complain too much about the stimulus package or the baby bonus. Which, IMHO purchased a lot of flat screen TV’s…..
But the real issue here is with the faceless middle men. The wholesalers and importers who are taking a very big clip of the ticket on the way through. Same as magazine distributors really. Between them and our ridiculously inflated property market, retailers are being squeezed. Retail space in Australia is hideously expensive and people like Frank Lowy, Macquarie bank et al are to blame there.
But the bottom line is this. A lot of Australian retailers are unable to purchase these goods at a price even close to the retail price offered overseas.
Companies like Canon and Sony have Japan set their prices in Australia. These Australian subsiduaries are effectively wholesalers to the retail market and they have little control over the prices that they are forced to “buy” the products at from their parent company.
The GST argument is of little consequence in this debate. It is simply more expensive to collect these taxes than the revenue received is. So in a sense not collecting the GST saves the taxpayer money.
Thats great Carrob, I’ll stop collecting GST on everything I sell for less the $1000 because it is all too hard for me and no one will miss it?
In the UK they collect VAT for everything over18 pound, they seem to think it worth it and they are able to police it, the whole thing is about GST not how cheap things are. We are losing out here.
carrob has raised an interesting point; with the Aussie Dollar at record high levels, why hasn’t our imported Stationery pricing dropped accordingly?? Who is making the extra cream from the larger margin….. definitely not shareholders??
Jarryd,
You missed my point. Importers by definition are based in this country and such already pay GST either as wholesalers or retailers. The ones using loopholes are the overseas operator that export directly to the end user and avoid any local taxes. If GST was chargeable on these grey imports it would actually generate revenue for the Government. With no input claims against the tax it would have the same affect as an import duty of 10% and at least this tax would go towards the nations benefit. I don’t see how this can be any less profitable for the government than any of the other tariffs / import duties that they currently charge.
As for local online companies, if they are truly local they will be collecting GST just as we traditional retailers do. The basic point from the governments point of view should be that this is a loophole that undermines the basis of our tax system to the benefit of overseas companies. I realize that taxing these imports will not make the goods dramatically dearer but that is not the only reason for doing it. My point is that they should be subject to the same tax conditions as us where possible and contribute some revenue to the country they are taking money from. It is after all our government and we benefit from them raising revenue from these overseas traders.
Luke say much the same far more concisely than me.
Gerry Harvey has made this a very one dimensional topic but it has much wider ramifications the just the retail price of goods in this country.
Oh, and I do not use this as an excuse for losing business, my sales are growing very healthily thak you very much.
when you purchase a good for let’s say $5000, you can tell the seller overseas to issue and invoice for $888 or item returned for service. in other words very hard for giv to collect gst on imported items.
Luke,
The point I am trying to make is that dressing the issue up as a debate about GST is actually not the driver for people ourchasing online. If you could collect the GST easily – we should go for it. Do we know if compliance cost more than the revenue received in the UK?
Whatever. the point is that people are not buying online to avoid the GST. This coalition of retailers seem to have one thing in common. An appalling internet strategy. Gerry maintained (quite voiciferously I might add) that the internet was a fad for the first half of the last decade. The chickens have come home to roost for these naysayers.
These organisations are just looking to soften the market and have something to blame when their appaling results come out.
An annecdotal example. Today I bought a 40″ LCD TV. Went to harvey norman, waited in the TV section and made eye contact with a sales person who just looked away. There were three of them, all LAYING AN EXTENSION CORD! I kid you not. I waited 5 minutes. No help came at all. Went straight across to JB Hifi and walked out 5 minutes later with a new TV.
It’s JB HiFi crushing Harvey Norman. Not the internet.
Oooh. And don’t ask me about the 40 minutes I also spent just then queing to buy some underwear and socks at Myer. Terrible.
Myer aren’t a part of this coalition are they?
Oh. Hang on.
I cant belive this…
I swore that i would never post on these blogs, after having had a post “edited” a couple of days ago by Mark after a comment on Tower..but here we are
THIS HAS NOTHING TO DO WITH GERRY HARVEY..
Belive me im not a fan of Harvey Norman…regardless of the fact that the stores are franchises anyway.
Ive never seen an argument miss the mark so widely either here or in the press..
Just goes to show how easly lead the general public is.
the problem is started with high living cost in australia.
you have high income and expenses when you shop overseas with high aud$$ everything is just a bargain ..
Gerry Harvey has made this about him. The campaign is ill conceived. There is a productivity commission inquiry underway as I blogged last month. This is where everyone with an opinion can be heard. It seems that Gerry and his mates don’t want to wait for that.
Brendan,
Overseas exporters that ship to end users here in Australia are not avoiding loopholes. A government can’t regulate tax for companies that exist in another country.
Anyone who imports goods (be it a retailer, wholesaler or end user) is an importer. Anyone who imports goods over $1000 (including end users) already pays GST on these to the government.
What the government is being called on to do is lower/remove the threshold at which GST is applicable.
Local online companies do collect GST (or at least all the ones I’ve dealt with have). Most still beat traditional retailers on service and price – if they don’t then they don’t survive long. Online retailing is far more ruthless/competitive that shop-front retailing.
(adding to the post again)
HN, propagated a model of discounting that was unheard of, when they started.
They begged/pleaded or whatever… to get a discount from the manufacturer to sell their gear. Constant subsidies was their game.
To deal with people who bought something off HN, thinking that it was legit, trying to upgrade their PC was a real blast !
To get the discount, HN would sell PC cases whose chipset was ‘3’ generations behind what was in existence at the time on the current market. I’m talking dated here. No multiple hard drive’s (no extra connections etc) blah blah…
It was like the old A&R computer resellers in Adelaide. Three grand for a PC setup, but the gutz was outdated.
I feel for those who bought into HN’s ideal of a cross between Westfield & Ikea. I mean those who spent money on that !
Gerry’s setup never had any market give to it. He pounded suppliers with back handed discounts; but he profited on a model that was total rubbish.
It’s strange saying this on Newsagents forum, it’s going to collapse for Gerry. He missed-used the shopping centre ideal & confused it with rebates from manufacturers.
You just didn’t learn what I did see what crap PC’s you sold people. You are a nasty piece of work Gerry. Real nasty.
http://forums.whirlpool.net.au/forum-replies.cfm?t=1706743
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