Phil, can you think of an easy solution to resolve this?
Nup, right now I am thinking maybe less is more, everything is going to get more global and that trend will accelerate, so trying to think of a tax for every little scenario is probably futile. I think the whole thing is way, way, too complicated, if you have a million rules then they are just going to start contradicting each other.
I kind of think it would be nice if there was no extra taxes like, stamp duty, payroll tax, GST and all the rest, then you just have income tax, have a sliding scale like we do now. You would have to make it more 'intent' based, i.e. if you hide income in an offshore account we have the right to make you show us that. Then we could enjoy the benefits of all this global competition a lot more and imagine if it really was a 3 page document, at least everybody would understand it. I do want to stress before I get flamed on this theory though, it's just a thought bubble.
I do think it is unfair that you have to compete with outside companies that do not end up paying duty or gst.
I think at least they could have seen this coming from about 5 years out and worked towards a level playing field before it started affecting thousands of people. But yes, not a fan of being discriminated against by the tax office, you should try it sometime! It's also unfair that you have to pay all these costs 'cos I just mark stuff up and pass it on.
From a micro level, you might be better off operating an external company, as you mentioned, to deliver imported products from outside Aus. You can become their agent, and sell this way. You could also sell locally held product, the same way you do now, for those people that can't wait.
Just being an agent/warranty guy is pretty depressing, rather retire to the farm being the pirate that I am. External company, drop shipping etc, already happening in a big way, especially in cycling, but if you think about it, if you buy a whole lot of stuff in bulk (the locally held product) you get HUGE freight cost benefits, just that there's so much compliance/taxes that this benefit ends up getting wasted. A company just selling a few things at a time from overseas should not even be close to competitive, doesn't make sense unless it was really high value low bulk items like jewellery.
P.S. Why do all of your examples have the local company taking a 33% markup? Why would the local company take more of a profit than the off shore company? I know it doesn't really change your point though.
33% I just made it up. Margins differ greatly, but theres a common sense rule of thumb, if you are selling market leading stuff like coca cola they ain't gonna give you much, but if you are selling the local drop they tend to give you their first born. Good looking promo girls changes all the rules.
Do you mean more of a profit on $ terms for the same item as the % is the same? You gotta work out your cost for that item, then mark it up that's all the o/s guy has done, otherwise you'll have these massive 'overhead' costs and lose yourself.
Stehsegler said:-
Also, I don't get where this "paying no duty" comes from? US firms as well as companies in the UK pay duty on products imported into the respective jurisdiction as well.
I'm venturing into unknown territory here so could be wrong, but say a brand like select fins gets a whole lot of fins made in china and sent to their UK warehouse/distribution centre. Select will pay the UK duty when the goods come from China.
If you were a UK shop, you could buy that off Select send it on to your Aussie customer no duty on the Aussie side.
But if you were and Aussie shop, you would pay the duty on it coming into Australia from the UK, it's a double dip.
And if you were an Aussie business that got the fins direct from China you would pay duty as it comes in, but if you then sold it to a UK customer, that UK guy would pay the duty again (as they collect the duty at the border down to 15 quid).
If you the customer are able to buy the fin direct from China, happy days you've circumvented everything. But a UK citizen doing the same thing would pay duty.
I also think its unfair that the postal system of the destination country ends up effectively subsidizing the postage costs too.
I've heard about this something like they are obliged to deliver it cheaply as a part of a reciprocal agreement, I know nothing about it, but wouldn't you just change the agreement when it expired?
Also, I wish people would stop quoting the same wholesale price for products traded in the US and Australia. They are not the same. You purchase products in one of two ways:
1) through a local distributor
2) direct from factory or through a distributor abroad.
Often the head office will stitch up a market by preventing foreign distributors and store to sell direct to the Australian public in order to protect the pricing of the local distributor.
In addition, the more you buy from the distributor the lower your wholesale price will be.
Unless you look at an example with the same wholesale cost and mark up, then it's impossible to examine the charges/gov't taxes, just like a science experiment, take out the variables examine one thing at a time.
Local distributors, buying groups and a million variations is the norm, but does not change the basic set up, just the local distributor would have paid all of those charges not the retailer.
Stitching up the market is basically the fundamentals of business, someone else wants to sell drugs on your turf, kill them, or wants to import stuff that competes with your business, lobby the Gov't to stop them, I agree this is not good. It occurs locally just as much as internationally. The Gov't should be striving to at least create a level playing field as best they can.
My aim was always to show that what the retailers are saying about 'red tape and gov't charges' is a decent part of the problem, and it was looking like the mob was hankering for a lynching of which I am one of the lynchees, and I'm already being rogered by the tax dept. "Better to die on your feet than live on your knees".
This IT enquiry with the Pollies brow beating about how they are going to be tough and subpoena salesmen to appear in front of them. Makes me sick, they know it's just a show, or worse they really are that stupid. May as well feed some Christians to the Lions while they are at it.
