Australian Parcel Tax

The Australian Government’s Department of Home Affairs has drafted a proposal to charge Australian shoppers a $5 tax on every parcel posted from overseas.

According to a discussion paper obtained by Fairfax Media, the department has been considering how to alleviate a deficit in the country’s bio-security budget caused by an influx of small parcels from overseas retailers. Around 38.7 million parcels, worth under $1000 each, were imported to Australia in 2017 – a 22% increase on the previous year. These parcels containing clothing, makeup and books represent 90% of deliveries entering the country, and the department predicts the number of low value consignments will further increase by 31% over the next four years.

The new tax could be in additional to the GST on small overseas imported goods that will apply from July 1.

The discussion paper, dated February 2018 reads:

"Existing cost recovery arrangements are no longer sustainable and will not support Australia’s future trading environment”

Freight and Trade Alliance director Paul Zalai told Fairfax:

"We should not be surprised if local small to medium exporters face reciprocal charges administered by foreign jurisdictions – a less than ideal outcome in an environment whereby our government is otherwise going to great lengths to remove trade barriers.

"Should the levy proceed, the e-commerce sector will be looking for transparency in costs and an opportunity to co-design biosecurity and border reforms to create more efficiencies and minimise this financial burden – the worst possible outcome would be for the sector to stuck with no option but to absorb the costs of legacy systems and processes"

It is believed the new levy could double the price of smaller online purchases when combined with the impending GST charge.

The tax would affect millions of Australian consumers who purchase online and from overseas retailers every year, and could have a flow-on effect to international retailers who ship goods under $1000 to Australia.

DHL senior vice president of Oceania, Gary Edstein, said:

"There has to be a smarter way of doing this, there is a fair amount of doubling up going on.

"Border Force should outsource those activities to industry, we have very tight screening processes for our staff and we would welcome a form of accreditation”

The Australian Government has advised more information will be revealed when the 2018 Federal Budget is handed down on May 9.

eShopWorld Insight:

While there is no confirmation of this new tax on cross-border parcels, the Australian Government is imposing a GST on foreign imported goods under $1000 from July 1. Australian consumers will be accustomed to not paying GST, therefore retailers selling into Australia run the risk of having a bad customer experience if they request payment at the door vs at the checkout. One way of avoiding this is to integrate a fully-landed cost into the checkout  so there are no surprises for the customer upon receipt.

The additional proposed $5-per-parcel tax would be an impediment to cross-border eCommerce, and only serves to harm Australian consumers.

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