Australian Prime Minister Julia Gillard says she would be very reluctant to change the way Australians shop on the internet, despite a coalition of retailers calling for GST to apply to all online purchases.
Harvey Norman, David Jones and Myer are leading calls for a tax-free threshold of $A1000 to be scrapped.
Currently no GST is imposed on goods bought from international websites for less than $A1000, which domestic retailers say grossly disadvantages them.
The Productivity Commission is conducting a review, but Ms Gillard says the Government is not contemplating changing the system.
The ABC reports the Government says it would be too expensive to impose the GST, saying it would cost more to administer the tax than the amount it would collect.
Ms Gillard says the problem needs to be seen in context.
"A small percentage, a very small percentage internet shop from overseas and the present advice is that in terms of revenue and recovery for that small percentage that it would cost more in administration costs than would be recovered in revenue," she said.
Last week, Assistant Treasurer Bill Shorten said the Federal Government would struggle to find enough Customs officers to police GST on goods purchased online from overseas websites.
He said the Government would not be bullied by the big retailers.
The ABC reports there is not a lot of support from acting Opposition Leader Julie Bishop either.
"I believe the current arrangements have worked in the past and should continue," she said.
"It provides competition and that's healthy. However, if the retailers believe they have a case, they should ask the Government to put the issue on the agenda for the tax summit."
The ABC reports online shopping accounts form an increasingly large part of Australia's retail spending and calls for a crackdown have been met with widespread scepticism by consumer advocates.