When Myer department stores were bought by foreign private equity investors who are in the business of buying and selling companies for a profit, they had no plans to ever pay tax on the money they made. They bought the company cheaply from within the Coles Myer structure where it was languishing and doing a fine job of impersonating a Stalingrad emporium circa 1960.
The new owners made some good changes and sold it for a huge profit to the dumb money of mums and dads who paid top dollar in the float. The shares were issued at $4.10 and have essentially never traded that highly since.
The Australian Tax Office calculated that the Texas Pacific Group private equity firm owed the Australian public around $678 million in tax on their profits on the deal and have been in pursuit of the money ever since. Myerâ€™s former owners booked their money from the float, sent it overseas quickly and have refused to pay anything, arguing that it was a one-off capital gain not profit as a result of the conduct of the ordinary business. Thatâ€™s important because foreign investors donâ€™t pay capital gains tax here but foreign companies doing business here do.
So when the well-salaried man appointed by TPG to run Myer who is still the CEO, Bernie Brookes, professes concern at Australians not meeting their tax liabilities in the form of Aussie mums buying clothes and toys and gifts for Christmas online then there must surely be more to it than meets the eye.
Bernie Brookes (who in addition to owning $43 million of shares in Myer is paid over $100K per week!), Gerry Harvey and Sol Lew have emerged as the Christmas Grinch trio of the nation.
Myerâ€™s silly stunt that it would operate a website from southern China to avoid GST is purely designed to protest against the rise of online shopping.
Our retail industry is $270 billion strong and is principally in the business of selling imported goods to Australians. With our economy strong and our currency absurdly high, they really shouldnâ€™t be whining.
But they really donâ€™t like competition, even if it is $1 billion a month worth, the number claimed by retail billionaires.
Cost-of-living is the most sensitive political issue in the country.
Many of those doing their shopping online are very value-conscious consumers, who invest a great deal of time and effort in selecting items online and then patiently waiting for them to arrive.
Myerâ€™s demand that the Commonwealth government scrap a $1000 GST-free threshold on these imported items would create massive delay and hardship on those online consumers. It would create a political backlash that would make the mining tax look incredibly popular by comparison.
Billionaire retailers say they worry about the public revenue. Everyone knows thatâ€™s a joke.
They donâ€™t want competition from websites, thatâ€™s actually the reason they want online consumers punished and taxed.
The truth of it is that traditional retailers can compete with and beat their limited online foes.Â Just this weekend came a newspaper survey that revealed that most books are cheaper in the stores than they are online.
Myer built a brand over more than a century. By not re-investing in their stores and failing to re-invent the old department store model, they looked very much damaged goods for a while.
But theyâ€™re doing a much better job now, their new Melbourne CBD store isnâ€™t fully finished but looks superb and seems to have more attentive staff, is much better designed with places to stop and have a coffee everywhere you turn and it challenged the impression Myer had allowed to create since sleazy billionaire Sol Lew became a big shareholder in it in the mid-1980s. They have really turned the corner and are starting to polish their tarnished brand from the mess it was left in people like Lew.
Thatâ€™s why their publicly stated desire to punish online shoppers is so misguided and foolish. They should be winning over customers by doing better not coercing them away from online competition (tiny as it is) through cheekily demanding new taxes and bureaucratic delays on the delivery of kidsâ€™ toys and Christmas gifts lovingly bought on eBay by Aussie mums doing the best they can for their families.
And when those demanding this punishment of Aussie online shopper battlers include a department store chain whose former owners are being pursued for nearly $700 million in tax liability and a couple of billionaires Gerry Harvey and Solomon Lew, it really does seem more than a bit rich.
And when those demanding this punishment of Aussie online shopper battlers include a department store chain whose former owners are being pursued for nearly $700 million in tax liability and a couple of billionaires Gerry Harvey and Solomon Lew, it really does seem more than a bit rich. These people have made their fortune flogging imported goods to families kicking back a little and showing Christmas-time generosity to each other. Instead of being grateful and gracious about all Australia has done for them, the rich and thick Bernie Brookes (who in addition to owning $43 million of shares in Myer is paid over $100K per week!), Gerry Harvey and Sol Lew have emerged as the Christmas Grinch trio of the nation.
The federal government seems very unlikely to cave to their outrageous demands:
Assistant Federal Treasurer Bill Shorten last night told BusinessDaily: “We are looking at making sure we have the settings right and (are) cracking down on people who rort the system, who bring in multiple batches of goods, each worth $999, just to get around the threshold.” Mr Shorten also said the government had no plans to put a GST on online shopping for goods under $1000.
Cracking down on rorters is fair enough but removing that threshold for Aussie consumers would be as popular as Clover Mooreâ€™s infamous attempt to banish Christmas decorations from Sydneyâ€™s CBD.