Australians buying clothes, books or health products from overseas could be slapped with a new tax on top of the GST.
The proposal to impose a new flat-rate levy on all imported parcels worth less than $1000 comes at a tricky pre-budget time for the government, as it seeks to sell its company tax cuts while tightening welfare arrangements.
"We're already extremely highly taxed," crossbench senator David Leyonhjelm told reporters in Canberra on Thursday.
"I despair at the idea that we'll never end up with any of our own money left in our own pockets."
Labor claimed the tax would affect millions of Australian consumers who purchase online and from overseas retailers every year.
"It's clear from the government's response that it preferred to try and sneak this change through without public debate under the cover of bigger political debates on Budget night," shadow treasurer Chris Bowen said in a statement.
"The Turnbull government needs to be upfront with Australians about the proposal and come forward and make the public case for it."
The plan, floated in a Department of Home Affairs discussion paper, seeks to balance the cost of security screening the booming number of small parcels.
The paper claims the problem is "importers of high-value consignments pay the costs of border activities for both low-value consignments and their own".
Close to 40 million goods valued under $1000 were imported into Australia in 2016/17, a 22 per cent increase from the previous year.
The government expects this to blow out by a further 31 per cent over the next four years.
In contrast, goods worth more than $1000 - that do attract a levy - only numbered 3.7 million in 2016/17.
The department is asking for comment on the proposed levy, which has been touted in government reviews since 2014, as part of an effort to share the cost.
It is expected freight and express courier services would bear the bulk of the burden, but business is concerned the costs will be passed onto consumers.
The flat fee for imported goods is yet to be determined, the discussion paper says.
"We expect the cost of the levy per parcel to be in the dollars not the cents," Freight and Trade Alliance director Paul Zalai told Fairfax Media.
Australian Associated Press