The National Retail Association is the latest body to join the Retail Coalition, which has sparked controversy with its push against offshore web shopping.
Representing 3700 small shops, the association maintains it is time the Federal Government imposed a 10 per cent GST on goods under $1000 bought from foreign online stores.
Online retailers based out of Australia are currently exempt from the tax.
Big retailers, such as Harvey Norman, Borders, Target and David Jones, are waging a campaign against the loophole, labelling it unfair and arguing it will cost jobs.
"The Australian community will pay an escalating price for the failure to address this blatant inequity," the association's director Gary Black said in a statement on Sunday.
"This price will result from GST lost, from duties and tariffs foregone, from customs fees and charges foregone.
"From job losses, payroll tax revenue reductions, and the cost to the economy of inevitable business failures."
The association has been lobbying for years to axe the GST threshold, which Black said explicitly favored overseas retailers ahead of those back home.
The government has said it will wait until the Productivity Commission wraps up its inquiry into the retail sector before making a decision, insisting it won't be rushed.
Black, who argued that retail job numbers have declined since November 2007, said local retailers did not profit from GST sales, but merely passed the revenue on to the government.
Meanwhile, peak retail group, the Australian Retailers Association, which is not part of the coalition, believes that growth in the sector has stalled.
Post-Christmas sales are predicted to rise by 3 per cent compared to the same time last year, with Australians on track to spend a record $6.9 billion, according to its forecast figures.
But the association's Russell Zimmerman said it was a modest increase and that growth had slowed.