18 Mar 2015

Local retailers welcome plan for online GST

9:45 am on 18 March 2015

Retailers say the Government's plan to tax purchases from foreign websites is great news for local businesses.

The Prime Minister said the country was missing out on more than $200 million a year in GST from other countries.

John Key said the Government could introduce measures taxing overseas purchases as early as this parliamentary term.

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Overseas goods are only taxed if they are worth more than $400. Photo: RNZ / Diego Opatowski

The Retailers Association has been lobbying for GST on online purchases for more than a year and its chief executive, Mark Johnston, said shoppers needed to be aware of the greater good.

"I don't think anybody wants to pay more than they have to - the reality is New Zealand is a very small market globally and we're never going to be able to compete fully on price with some of the bigger global markets.

"When you buy locally, you're investing in local communities... I think most Kiwis are pretty happy to pay their fair share of tax, and that includes GST."

Chief executive of Briscoe Group, Rod Duke, said the current system of only taxing overseas goods worth more than $400 was killing local businesses.

"I think if you have a look at the business reports of the last six to 12 months, you'll find that at least 10 significant retailers have simply just gone out of business in this country," he said.

"I don't have a problem with competitive pricing, but when you start with a 15 percent advantage, that just seems abundantly unfair to me."

But online shoppers commenting on Facebook and on the streets of Wellington yesterday bristled at the proposed move.

Susan Mends called it "unfair," while Simon Wolyncewicz said: "I think it's going to put off a few shoppers."

"I do feel sorry for the women out there who buy a lot of fashion online, I think with the introduction of GST it might tip the scales a wee bit," he said.

Even with the extra 15 percent, Consumer NZ chief executive Sue Chetwin said online shoppers would keep going overseas for certain products, as they would still be cheaper and potentially better quality.

She said she wanted to know how any new policy would work, and whether overseas retailers would be taxed directly, or by customs at the border.

PricewaterhouseCoopers GST specialist Eugen Trombitas said the IRD, tasked with drafting the policy, would pay to look overseas for advice.

"What you're dealing with is a situation which is becoming familiar now in other countries - South Africa, quite a lot of European countries are now in that regime from the first of January this year, Japan is moving that way - New Zealand could look at those countries and consider what would work here."

He said New Zealand could not afford to be left behind.

"We've been adopting a wait-and-see approach, so I wouldn't necessarily say we're behind, but if you give it another year of two, I'd definitely say we'd be behind," he said.

"So now's the time to look at this."

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