State and federal governments lovingly eyeing off a billion-dollar windfall if the GST threshold on online purchases is lowered are deluding themselves, according to a former Treasury economist now with the National Australia Bank.

The NAB conducts a long-running research series into online commerce in Australia, giving weight to its chief economist, Alan Oster, stating that the take from eliminating the GST threshold entirely would raise a paltry $AU360 million.

Currently, the Australian Customs Service allows incoming packages to escape assessment for GST if the goods are valued at less than $AU1,000. This administrative decision, labelled a “loophole” by the retail industry and its lobbyists, is designed to avoid spending five dollars in bureaucracy to recover three in tax.

The threshold has long been fingered by bricks-and-mortar retailers as the cause of their woes, helping them draw attention away from geographic price discrimination practiced by multinational manufacturers.

In late November, Australia's state treasurers began lobbying the Federal government to change the threshold.

According to The Age Ostler, launching the latest NAB retail sales index, said the “best case scenario” of a zero threshold would be $AU360 million.

In fact, Ostler said, NAB's analysis of two million transactions per day leaves no doubt that there's no secret pot of gold awaiting the government.

“If you lowered the threshold from $1000 to $500, you would raise $40 million; if you lowered it to $100, you would raise $210 million; if you lowered it to $25, you would raise $310 million,” he said. “And if you got rid of it completely, you would get about $360 million.” ®