Plan to hit online buyers with GST could cost $2 billion

The government is set to slug all online purchases with the GST, but critics of the plan say it will cost more to implement than it will raise.

Overseas purchases bought online for more than $1000 already attract GST, but the move would see smaller purchases hit with the tax, with figures suggesting it could raise about $550 million.

However, estimates suggest it could cost up to $2 billion to implement.

Australian shoppers spent more than $17 billion online in the past year, and about $4 billion of that went overseas.

Finance Minister Mathias Cormann said the changing nature of the market had to be acknowledged.

“Circumstances in the economy have changed with a significant increase in the level of online shopping … particularly from overseas,” he said.

Local retailers would be the chief beneficiaries, who would gain an advantage over cheaper manufacturers in Asia and the USA.

However, economists say the move will not stop cheaper details from being available overseas.

CommSec chief economist Craig James said overseas suppliers had other options available.

“They may respond and offer free shipping, free other costs, to be able to get around it,” he said.