Time to end tax-free purchases on the web

02:29, Mar 04 2014

They were at it like rabbits. Two Christchurch teenagers feverishly snapping away on their iPhones, an ever-growing gallery of footwear photos that took their fancy at Rebel Sport.

Their equally fevered conversation made it abundantly clear to anyone within ear-shot that these customers had no intention of buying anything in-store.

They were simply using and abusing the retail outlet to photograph merchandise for ensuing purchase on a cut-price online site.

Do showroomers ever look retailers in the eye and wonder if their behaviour is fair on them? I happened to notice a store assistant was powerlessly watching on, with a face that could have curdled chip fat.

I remarked to her that "just browsing" has metamorphosed into "just showrooming".

"We're being screwed," she replied, "but what can you do about it?" What, indeed.


Over the weekend, in Sydney for work, I noticed some Paddington retailers were retaliating. One snooty-looking boutique had a big red sign on its front window. "No Showroomers."

Down the road, a footwear store displayed a cautionary sign on its door, "We reserve the right to charge you a $5 fitting fee, which will be fully refunded upon purchase." As much as the tactics are understandable, fitting fees are as friendly as carbolic soap.

Surely they'll simply scare the bejesus out of prospective shoppers from entering your store.

The insatiable surge in off-shore online shopping is redefining the face of retail. In 2013, online shopping growth among Kiwis grew year-on-year by 15 per cent - five times the growth of bricks-and-mortar retailers.

Yet, at this stage, online retail is still an adolescent, accounting for 7 per cent of total retail spending.

The likes of Amazon, Asos and Ebay enjoy an unfair, unjustifiable and unbeatable price advantage, given their GST-free status on purchases under $400.

Would closing the tax loophole be a silver bullet for retail stores? Of course not. But it is a matter of the most basic fairness.

Australia is set to elevate the matter on to the G20 agenda, aspiring to formalise a global e-commerce protocol, in a similar way to how airlines collect a plethora of fees for scores of governments.

It is nonsense to suggest that administering a tax-collection scheme with offshore retailers is too problematic.

Amazon, for example, already has to apply all manner of state-based sales taxes for United States purchases, and remit the revenue. It is time to end this tax avoiding free lunch while it's still a snack and before it balloons into a full-blown feast.

We're already losing out on hundreds of millions in GST revenue.

Do we really want it to become billions?

The Press