More than 118,000 Australian traditional retail jobs will be lost over the next three years because of a combination of factors, including as a direct result of the Federal Government's refusal to abolish a GST and import duty exemption afforded to foreign-based internet retailers.

The National Retail Association has based its dire outlook on the findings of a new report it commissioned from Ernst & Young. 

The report estimates that 118,700 traditional retail jobs will be lost by 2015, including 33,400 as a direct result of the Low Value Threshold (LVT).

The report said foreign retailers currently enjoy an average 14 per cent price advantage over their Australian-based counterparts and will hold 75 per cent of all non-food online retail sales in Australia by 2015. 

The report shows that the forecast decline in GDP would far exceed the proposed cost of compliance that would result from the abolition of Australia's $1000 LVT.

Despite the findings, the Federal Government has indicated that following a Productivity Commission inquiry into the retail sector last year, it will leave the LVT unchanged but will examine the impact of existing customs regulations.

In comparison to Australia, other developed and developing economies have taken steps to ensure a level playing field for international retailers in their own jurisdiction by imposing relevant local taxes at thresholds significantly lower than in Australia. 

Canada (CAN$20), USA (US$200), South Korea (W150,000) and New Zealand (between NZ$220  and NZ$400) are able to collect taxes from a greater proportion of imports than compared to the current Australian regime, according to the report.

The United Kingdom abolished its LVT from 1 April this year because of the anti-competitive impact it had on the domestic retail industry, the report stated.

NRA executive director, Gary Black said the report findings clearly demonstrate the Federal Government's inaction on the GST and import duty exemption is the greatest threat to traditional retail jobs and domestic online retail growth across Australia.