JULIA Gillard has defended shoppers' right to bag a bargain, in an apparent snub to big retailers who want online purchases taxed.

She says the Government will wait for the outcome of a Productivity Commission inquiry before formally responding to a push by big retailers to impose the goods and services tax on online purchases from overseas.

Ms Gillard also said that axing the GST-free threshold would not be financially smart.

"It would cost more in administration costs than would be recovered in revenue," she told reporters in Canberra.

"I would be very reluctant to see Australians who are facing cost-of-living pressures not able to access shopping on the internet in the way they access it now."

The high-profile campaign by the Retail Coalition has sparked the ire of shoppers, who argue it's their right to buy cheaper goods online.

Representing 3700 small shops, the association maintains it is time the Federal Government imposed a 10 per cent GST on goods under $1000 bought from foreign online stores.

Online retailers based outside Australia are currently exempt from the tax.

Big retailers are waging a campaign against the loophole, labelling it unfair and arguing it will cost jobs.

"The Australian community will pay an escalating price for the failure to address this blatant inequity,'' the association's director Gary Black said yesterday.

"This price will result from GST lost, from duties and tariffs foregone, from customs fees and charges foregone.

"From job losses, payroll tax revenue reductions, and the cost to the economy of inevitable business failures.''

The association has been lobbying for years to axe the GST-threshold, which Mr Black said explicitly favoured overseas retailers ahead of those back home.

But Prime Minister Gillard said the Government would not be rushed into a decision on the matter.



"There is a process for dealing with GST and online sales questions ... we have the Productivity Commission process," she said.

Asked if the GST rate should be raised at the government's big tax summit, which is due to be held before July, Ms Gillard said: "The GST is not on the Government's agenda.

"There is absolutely no way in the world that the Government is going to be revisiting rate of GST questions."

Mr Black, who argued that retail job numbers had declined since November 2007, said local retailers did not profit from GST sales, but merely passed the revenue on to the Government.

Meanwhile, peak retail group the Australian Retailers Association, which is not part of the coalition, believes that growth in the sector has stalled.

Post-Christmas sales are predicted to rise by 3 per cent compared to the same time last year, with Australians on track to spend a record $6.9 billion, according to its forecast figures.

But the association's Russell Zimmerman said it was a modest increase and that growth had slowed.

With The Courier-Mail