Australian shoppers would have to pay a $5 tax on every parcel posted from overseas under a federal government plan to cover skyrocketing security screening costs.
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Parcels containing purchases like clothing, makeup and books worth less than $1000 - which now represent 90 per cent of deliveries entering Australia - would attract the new tax.
The Department of Home Affairs proposal will provoke opposition from online retailers like eBay and Amazon, as well as delivery providers who have warned the full cost would passed on to consumers already preparing to pay GST on small online purchases from July 1.
A discussion paper obtained by Fairfax Media shows department is considering ways to balance the bio-security budget, which is under pressure by the explosion in small parcels entering Australia from overseas retailers. Some 38.7 million parcels worth under $1000 each were imported to Australia last financial year - a 22 per cent increase on the previous 12 months.
The department predicts the number of low value consignments entering the country will increase by a further by 31 per cent over the next four years, compared with only 10 per cent expected growth in high value consignments.
Industry sources said after negotiations with the government, they expected a flat rate of about $5 per parcel, significantly less than the $90 levy currently charged on all deliveries worth over $1000.
"As the volume of imported low value consignments continues to grow, so too do the costs of biosecurity, cargo and trade border activities for those consignments. This has created increasing inequity and cross-subsidisation, where importers of high value consignments are paying for the border activities attributable to other users," a discussion paper dated February 2018 notes.
"Existing cost recovery arrangements are no longer sustainable and will not support Australia’s future trading environment."
The paper shows freight and express couriers would wear the bulk of the levy, along with any individuals who import more than 1000 items a year.
Freight and Trade Alliance director Paul Zalai told Fairfax Media those costs would be passed on to consumers.
"We expect the cost of the levy per parcel to be in the dollars not the cents," he said.
Some stakeholders believe the new levy has the potential to double the price of smaller online purchases when combined with the GST.
Applying a $5 per parcel tax would boost the budget by up to $200 million in the short-term, growing over time as more parcels arrive in Australia each year.
The plan has re-surfaced in time for the May budget, but stakeholders were first consulted more than four years ago as part of a range of potential reforms to border charges.
A spokesman for Treasurer Scott Morrison said: "We don't comment on budget speculation."
The discussion paper notes the introduction of a levy "is a decision for government" and suggests "time would be needed to introduce legislative amendments and for industry to adjust".
Comment has been sought from the Department of Home Affairs, and Home Affairs Minister Peter Dutton.
Mr Zalai warned any levy could see retaliation from countries that post goods to Australia.
"We should not be surprised if local small to medium exporters face reciprocal charges administered by foreign jurisdictions – a less than ideal outcome in an environment whereby our government is otherwise going to great lengths to remove trade barriers," he said.
"Should the levy proceed, the e-commerce sector will be looking for transparency in costs and an opportunity to co-design biosecurity and border reforms to create more efficiencies and minimise this financial burden – the worst possible outcome would be for the sector to stuck with no option but to absorb the costs of legacy systems and processes."
