A new ‘Amazon tax’ bill proposed by previous National government could see international goods being taxed by the end of 2019.
This tax would cut out the ‘loop hole’ on internet shopping which allows international retailers to sell into New Zealand without paying GST.
A Cabinet paper created by former National government suggest that international firms should become responsible for levying GST on items worth less an $1000 that they sold into the country.
New Zealand retailers will no doubt back the bill as to level the playing field between international competition, even though it is estimated that $42 million from the tax payer in the first year would go straight to the government.
The bill is yet to be passed, as it was put on the back burner by National in September during the elections. Greg Harford, general manager of public affairs for Retail NZ, has said it abut time the unfair advantage is leveled.
“At present, the government actively disadvantages Kiwi retailers by making them pay 15 percent GST on sales. Foreign ‘etailers’ are not required to do so, which gives them a price advantage when selling to New Zealanders.”
Harford expresses the economic benefits of including an ‘Amazon tax’, ranging from an expected collection of $200 million in the first year and at least $5.8 billion in tax revenue over the next ten years.
“We are now the only country with a GST or VAT consumption tax that retains a high de minimis threshold, and we are therefore the only country which continues to confer significant tax and price benefits on foreign retailers at the expense of domestic business.”
NZ Retail says that if GST were pre-paid on these items by the supplier, around 390,000 parcels would no longer need to be assessed for GST as they entre the country.
“It is not suitable for the government to continue to turn a blind eye to global companies doing business here without paying their share of tax,” says Harford.
“Retail NZ strongly supports ‘efairness’ and has been campaigning for a number of years to have the government level the playing field for GST.”
Harford says NZ Retail would like to see the decision announced as part of this year’s budget. The proposed bill at the moment has an aim date of October 2019.