Retailers in GST counter-attack

TOM PULLAR-STRECKER
Last updated 07:25 21/03/2013

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Retailers are stepping up efforts to close a "loophole" that allows GST-free purchases of overseas goods costing less than $400.

The Booksellers Association yesterday released research commissioned from a Victoria University "think-tank" which suggested slashing or abolishing the threshold altogether, and that overseas retailers could be given the choice of collecting the tax on behalf of Customs.

Association chief executive Lincoln Gould said the failure to impose GST on personal imports represented "a serious and growing hurdle" for local booksellers and other retailers.

Gould said he had presented the research to ministers, including Finance Minister Bill English and Revenue Minister Peter Dunne, and had been promised they would seek advice from officials. It was now over to the Government to act, he said.

Retailers Association chief executive John Albertson said the import threshold was costing the Crown $300 million a year in lost revenue, far more than the $17m the Government had sought to raise through its ill-fated plan to tax employee car parking.

Labour revenue spokesman David Cunliffe said a low threshold for charging GST on overseas purchases would stop the Government "subsidising foreign commerce" and was a "no-brainer".

Gould said he acknowledged proposals to lower the GST threshold had not gone down well with consumers in the past, but there was an issue of fairness.

"We recognise 15 per cent GST is not the only issue with regard to the price of books in this country, or the price of anything else."

Gould said overseas publishers had been slow to reduce prices in line with the appreciation of the kiwi dollar, but the association was working with American, British and Australian publishers to tackle that.

The Government has so far resisted reducing the tax-free import threshold, which can range between $226 and $400 depending on whether individual items attract duty.

William Steel, the author of the report by Victoria University's Institute for the Study of Competition and Regulation, said it could be in the interests of online giants such as Amazon to voluntarily collect GST on behalf of governments, if in return they benefited from faster clearance of their products by customs agencies.

He suggested overseas retailers that chose to collect GST for the New Zealand Government could also be absolved from charging customers a $38 administration and biosecurity fee now levied on all imports that attract GST.

Steel said attempting to get payment businesses such as credit card companies and PayPal to collect tax might not be as practical, partly because they could not know whether purchases would be subject to import duty or were intended for consumption within New Zealand.

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Researcher Frost & Sullivan estimated New Zealand consumers bought $3.2 billion of goods and services online last year and overseas websites took a 35 per cent share.

The institute study estimated that abolishing the tax-free threshold would result in a 27 per cent rise in purchases from domestic internet retailers.

- BusinessDay.co.nz

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