The new online tax will only be collected from self-declaring overseas retailers with turnovers of more than $75,000 and the Australian Tax Office has no power to punish those beyond the ATO's jurisdiction.

"The ATO can't really deny access to the websites, they might try to to slow parcels down at the border but it is very unlikely that foreign taxation offices are going to help enforce that tax," he said.

"The tax is designed with the near impossibility of its collection in mind."

Treasurer Scott Morrison introduced the tax to "level the playing field" for local businesses - who have paid GST since 2000 - after widespread lobbying from high-profile bricks and mortar retailers such as Gerry Harvey.

The ATO and Mr Morrison were contacted for comment.

Professor Berg said the extra tariff was a double tax as overseas businesses with a local GST would still have to pay the tax in their home country.

Sydney shopper Ryan McCaugherty said he spent up to $100 a month online, buying a new business shirt every two weeks along with electronics such as USB cables.

"I'm pretty annoyed," he said. "When you get to the check-out and see that extra tax it's not going to be pretty."

He said felt like he had been "kept in the dark about the tax," despite it being announced in the 2016 budget and then delayed for another year.

"You want domestic producers to do better, but at the same time they need to be globally competitive so the consumer benefits," he said.

Local retailers got another boost on Wednesday when Mr Joyce's committee called for taxpayer-funded grants for small businesses to push them online and "loopholes that provide internet-based companies a competitive advantage to be shut down".

The inquiry found online turnover has grown 142 per cent since 2013, almost nine times the growth rate of the rest of the retail industry, while domestic online retailers such as the Iconic still receive 80 per cent of online spending by Australian consumers.

In March, Home Affairs Minister Peter Dutton declared his department would not proceed with a $5 "parcel tax" on top of the GST to recoup spiralling screening costs for more than  38.7 million parcels after Fairfax Media revealed it had been considering the proposal.

The extra tax on top of the GST would have seen some popular items such as make-up nearly double in price.

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Bessie Hassan, an expert at online comparison website finder.com.au said overseas retailers such as Net-a-Porter, Neiman Marcus and Farfetch were increasingly timing their sales for Australian holidays as their Australian online business booms.

"Once this tax is in full swing, we’re unlikely to see a total rush back to brick and mortar stores," she said.