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GST for online shopping? Don't expect sweeping siteblocks any time soon

Nobody likes paying an extra 10 percent on their online shopping. But you're not likely to face a blanket blackout on Asos, eBay or Amazon.

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Ever since the Federal Government announced plans to charge GST on all online purchases under AU$1,000, Australians have been pretty miffed about the thought of paying more when they shop online.

But consumer group Choice says things could get much worse.

The group is warning that the Government could go as far as blocking overseas websites altogether if they fail to comply with the new tax scheme.

Choice says it has "found a legislative loophole" that would allow the Government to block overseas retail sites that fail to voluntarily collect GST. The group says site blocks could come into place as early as July 2017, leading consumers to be shut off from their favourite shopping sites and lose access to hard-to-find products.

But the "loophole" that Choice is referring to isn't new.

The site-blocking powers come under Section 313 of the Telecommunications Act, which stipulates that carriage service providers (such as telcos and internet service providers) can be compelled to block access to particular sites for purposes including enforcing criminal law and "protecting the public revenue."

But how likely is it that the Government would shut down corners of the internet to stop you from buying that obscure 70s vinyl or those limited-edition, size 14 Nikes?

We put that question to the Treasury department, which would be responsible for enacting such a measure, and it spent the better part of a week not getting back to us.

There's no doubt that the laws are problematic -- we previously covered the time when ASIC mistakenly requested to block 250,000 websites under this section of the Act.

But would the Government need to go after online shopping sites in the first place? If retailers are particularly lazy or negligent, then perhaps. Choice head of communications Tom Godfrey said, "It's unclear why foreign retailers would adhere to Australia's tax change."

For its part, the Federal Government admitted last year that collecting GST would be a challenge, with Treasurer of the time Joe Hockey saying retailers would largely do it on a "voluntary" basis. But, importantly, Hockey said the large retailers were already complying with Australian law.

"I am absolutely confident...companies [such as Amazon] will work with the tax office to apply GST to their sales in Australia, because they're doing it other countries around the world. And that is because they want to be good global corporate citizens," Hockey said.

And that's why the Government likely won't have to go as far as siteblocking. It's in retailers' best interests to stick to the local laws in the countries where they're established -- whether that's Amazon abiding by US consumer law, eBay complying with UK tax law or Nike collecting the right GST on your custom lime-green kicks.

As countless digital experts have also told us, site blocking is a "blunt instrument." And if the previous attempts are anything to go by, it can also be a slow process. Village Roadshow and Foxtel are currently petitioning a number of Australian ISPs in the Federal Court to block overseas piracy websites (under section 115A of the Copyright Act) and we're still waiting on a result.

Is it worth going through the hassle of petitioning ISPs to block overseas shopping sites? ISPs have already shown a real hesitance to block even piracy sites, and blocking stopping risks a massive pushback from consumers and retailers alike.

It's unlikely any major retailer would take being blocked in an entire country lightly. And it's similarly unlikely the government would start throwing siteblocks around without significant reason or demonstrable revenue value.

So get annoyed at the 10 percent jump in prices for online shopping, but don't worry about getting shut out of Asos just yet.

(And if you do, we're pretty sure you know a thing or two about VPNs).