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Australian Retailers Campaign Against Online Exemption

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Jan. 4 (Bloomberg) -- Myer Holdings Ltd. and David Jones Ltd., Australia’s biggest department stores, are helping fund a campaign against sales-tax exemptions for purchases worth less than A$1,000 ($1,016) from overseas websites.

All online retailers must impose the 10 percent goods and services tax or domestic operators be given the same exemption “to create a level playing field,” the retailers said in full-page advertisements in today’s Age and other newspapers.

Online purchases account for about 3 percent of the nation’s more than A$240 billion retail industry, according to government’s estimates. Overseas websites such as Amazon.com Inc. generate less than half of that Internet-based sales.

The government last month referred the matter to the Productivity Commission, a statutory body that advises on economic matters. Recommendations are due later this year.

“There is no denying that retailers are doing it tough,” Assistant Treasurer Bill Shorten said in an e-mailed statement today. “Consumers enjoy shopping online because it offers them choice, convenience and often discounts far beyond 10 percent.”

Shorten also cited gains in the Australian dollar, which has increased consumers’ buying power from overseas. Among the 16 most traded currencies, the Australian dollar was the second-best performer against its U.S. counterpart in 2010 with a gain of 14 percent. The unit last week reached its highest level since the end of exchange controls in 1983.

Gap, Amazon

Australian online sales grew about 8 percent in the 12 months ended in June, with the strongest growth coming from offshore destinations, according to Macquarie Group Ltd. That growth is driven by consumers seeking products and brands not available locally, such as from Gap Inc., or cheaper options through websites such as Amazon.com, Macquarie said in a Dec. 22 note to clients.

The retailers including Harvey Norman Holdings Ltd. and Premier Investments Ltd. said without the changes in tax rules, the growth of overseas sales threatens their 2,000 stores and 76,000 jobs.

“These businesses don’t pay our taxes, employ our people, train our young people or contribute to our economy,” they said in the advertisement. “Failing to support Australian retailers will see a reduction in hours and shifts.”

To contact the reporter on this story: Robert Fenner in Melbourne rfenner@bloomberg.net

To contact the editor responsible for this story: Frank Longid at flongid@bloomberg.net