An expert panel has urged the government to immediately halve the $1000 GST-free threshold for goods bought from overseas online, and said Canberra should consider changes that could ultimately see the threshold cut to as little as $20.

With state budgets under severe pressure due to sluggish growth in GST revenue, a report by former premiers Nick Greiner and John Brumby and businessman Bruce Carter, published on Friday, said collecting more tax from overseas online purchases should be a ''high priority''.

The expert panel recommended the government drop the GST-free threshold for goods bought from overseas online to $500 immediately. Credit:Louise Kennerley

It said the current threshold of $1000 was out of step with other countries, and the government needed to consider ways to bolster the tax and ensure a level playing field for local retailers.

As a first step, it argued the threshold should be halved to $500 ''immediately''.