15 October 2010
Deputy Prime Minister and Treasurer	cc:	Assistant Treasurer and Minister for Financial Services and Superannuation
low value import threshold	
Timing:  You requested yesterday that briefing be prepared for you by today.	
Issue:  
•	You asked for information on why a low value import threshold of $1000 is appropriate. 
Noted	Signature:		…../…../2011
	
Key Points
 	
Section 22 Not Relevant

 	

•	We understand that some domestic retailers have called for a lowering or abolition of the threshold to relieve the ‘uneven playing field’ that currently exists because there is no GST or customs duty charged on the goods valued under the threshold.  However, exchange rate effects, rather than GST, are more likely to be causing lower prices for imported goods currently.  
–	
Section 22 Not Relevant

Adding GST, customs duty and an import processing fee to the price of some imported goods might not necessarily increase purchases of goods from Australian retailers.

Pages 2-3
Section 22 Not Relevant

Section 22 Not Relevant

 	

Exchange rate versus GST
The absence of GST and customs duty on lower value imports is unlikely to be the main reason for strong price competition for some locally retailed goods.  Since the beginning of 2010, the $A has appreciated 11 per cent against the $US, 13 per cent against the Euro, 11 per cent against the UK pound and almost 6 per cent against the $NZ, which (ceteris paribus) should have reduced the direct price of imports.  If local retailers have not passed on their own exchange rate savings in their local retail prices of imported goods, price differentials will be exacerbated.  Other factors possibly resulting in lower priced imports include lower marketing costs overseas, quality variations and bulk supplies.  Ten per cent GST may be inconsequential. 

Section 22 Not Relevant