The coalition government won't go ahead with a Labor-proposed move to give the treasurer regulatory power to change the way GST applies to goods bought overseas via the internet.
Instead, the government would need to amend legislation to make the change.
A working group in Treasury is looking at the business case for changing the "low value import threshold" - a $1000 threshold at which GST is collected on goods bought from overseas.
The Labor government had proposed to give the treasurer the regulatory power to change the threshold, but this won't proceed under the coalition government.
The previous government had also been advised having a lower threshold would be expensive to administer, negating the benefits of extra revenue.
Any change to the threshold by the Abbott government could run into trouble, given its election commitment to make no changes to the GST "full stop".
About 60 million parcels enter Australia each year containing goods priced under the threshold.
Retailers have argued the high threshold makes it harder for Australian businesses to compete.
Former Victorian premier John Brumby, who was involved in a review of GST distribution, said on Wednesday it also meant the states were missing out on about $1 billion a year in revenue which could be used for schools and hospitals.
He said in the long term the threshold should be cut to $20 as it stands in the US, UK and Canada.
"When you look at the numbers in this ... the proportion of online offshore purchases as a total of retail sales is just galloping away," Mr Brumby told the National Press Club.
"This is costing Australian jobs, costing Australian retailers, it's an unlevel playing field and it needs to be fixed."
Mr Brumby said other countries did not find the cost of compliance a burden, as the transactions were all conducted on computers.
"It's just a non-issue," he said of the administration concerns.
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