Tax feud over online shopping

Retailers are launching ads demanding the government tax items bought online, as consumer groups slam them for 'alarmist self-interest'.

Billionaire retailer Gerry Harvey wants the federal government to give him the same free kick his overseas competitors are getting from a GST exemption for online sales.

Mr Harvey is one of the backers of an advertising campaign, launched by a group of Australian retailers on Tuesday, that aims to convince the government to level the playing field against foreign websites offering tax-free goods.

The campaign, backed by Myer, David Jones, Harvey Norman, Target, House, Borders, Angus & Robertson among others, began with full-page advertisements in some of the nation's newspapers.

"We agree with our customers that online retailing is a wonderful convenience that is here to stay," the advertisement reads.

"We also agree that fair competition is good for our customers and we want to be able to offer them the same Australian tax exemptions that offshore retailers enjoy."

No GST up to $1000

At the moment, no GST is imposed on goods that are bought from international websites for less than $1000.

Mr Harvey says that exemption gives overseas retailers "a free kick".

"Why can't I have the same deal as overseas retailers?" he told ABC Radio.

"I employ people in this country, I do pay taxes, I pay rent so can I have the same go?"

Mr Harvey said overseas retailers regarded the GST exemption as "manna from heaven".

"You've got stores all over the world thinking 'what a beauty that Australia is'," he said.

"This is a shocker."

Imposing tax 'too expensive'

Assistant Treasurer Bill Shorten maintains that imposing the GST on every item purchased from overseas is too expensive.

"The cost of compliance would be greater than the tax raised," he said, adding consumers and retailers wanted a considered response from the government, not a knee-jerk reaction.

Mr Shorten said there was no denying Australian retailers were doing it tough in recent times.

"But the GFC (global financial crisis), the high dollar, poor sales before Christmas, I don't think justifies flattening a tax willy-nilly where it hasn't existed before."

Mr Harvey was unimpressed by the argument, accusing Mr Shorten of being out of touch.

"Bill, wake up," he said.

Consumer groups slam campaign

Consumer advocacy group Choice described the retailers' campaign as an "alarmist red herring" driven by self interest.

"The big chains should recognise that it's their high prices, limited range and poor customer service that increasingly encourages people to use the internet," spokesman Christopher Zinn said in a statement.

"Consumers are simply chasing the best deal and the best service and often these days that is found online."

Choice used the example of a digital camera (Canon IXUS 1000 HS) available online from Myer for $557.

The same camera could be purchased though an Australian online retailer for $433.50.

Purchasing the camera from Hong Kong through a company with Australia-based sales staff would cost $346.

"Major stores are not being forced by anyone to charge these high prices," Mr Zinn said.

"This debate is about quality of service, competitive pricing and the inability of some retailers to understand the future of internet shopping."