Skyrocketing sales tax evasion in the computer industry is threatening Harvey Norman's continued presence in computer retailing, according to Harvey Norman group controller Tony Gattari. If rampant sales tax evasion continues unchecked, the retail giant will "have to reconsider our entire involvement in the computer marketplace", he said.
"We have put an enormous investment into the market and plan to continue it next year but we can't do it if this issue isn't solved," Gattari said. Last year the computer sales tax evasion industry cost the retail chain in excess of $60 million worth of lost revenue, Gattari said. In addition, printer sales have been particularly affected and Harvey's has been forced to alter its business mix toward software sales in order to offset the impact, he said.
Over the past two years, Harvey Norman has watched serious sales tax evasion expand from Melbourne into New South Wales and Queensland, Gattari said. "It's spreading like a plague. We need an antidote to stop it in its tracks."
Alliance to be formed
Gattari says Harvey Norman is counter-attacking by working to create a united anti-evasion alliance among major suppliers and retailers. The broad-based alliance, which Gattari says will include consumer groups and charities affected by tax exempt goods and services, will be set up to study the problem and make recommendations to the Federal Government. Gattari says fresh approaches are needed for sales tax collection that would shrink current loopholes and re-level the playing field.
Australian Tax Office officials with whom Harvey Norman has discussed the initiative have welcomed it, Gattari says. Co-ordinated industry action is needed because past attempts by individual companies to derail tax dodges have backfired. One large printer wholesaler reportedly it lost 13 per cent of its annual market share in two weeks when it attempted to institute a unilateral ban on tax-exempt sales last year, he said.
In related news, the ATO is preparing a consultative document on tax evasion scheduled to be published in mid-September.
As well as being available in hardcopy, it will also be available on the Internet at http://www.webaustralia.com.au/ato/atohp.htm