The move comes after the Prime Minister said last month that adding GST is inevitable, but no immediate moves have been made to fast track the issue.
Retail NZ’s general manager of public affairs, Greg Harford, says despite the Prime Minister’s recent comments, the government hasn’t made any commitment to closing the loophole.
“Closing the loophole is not about retailers, it’s about eFairness for all New Zealanders,” Harford says.
“The current loophole is threatening local town centres, costing Kiwi jobs, and eroding the tax base.”
According to Retail NZ, Kiwis spend almost $1.5 billion on goods from overseas websites, and the number is growing.
Harford says the government is losing at least $200 million a year in GST and duty on low value goods.
Under current law, goods from overseas websites that are under $400 generally aren’t charged GST.
This makes New Zealand the second highest tax threshold in the world, which Harford says is out of step with other countries.
“Taxes like GST are supposed to be applied universally. Low value thresholds apply in other markets too, but they are generally much lower than ours – at between NZ$20 and NZ$30,” he says.
“In New Zealand, you can generally import goods worth up to $400 before needing to pay tax. This just isn’t fair.”
New Zealand dawdles, while Australia makes strides
Across the ditch, Australia is making progress to make overseas-based online sellers pay GST.
Dubbed the ‘Netflix tax’, Australia’s federal treasurer Joe Hockey has agreed that movies, music, books and other media from overseas providers such as Netflix and Apple should be subject to GST.
There are also plans to apply the GST to goods bought online that are less than $A1000. The current tax threshold in place is $1000 – the highest in the world.
Hockey told the Australian Business Review Weekly that the tax would be easy to implement and create billions in extra revenue.
The move by our closest neighbour may encourage the government pick up their pace on the issue and follow suit.
Indie booksellers some of the hardest hit by GST loophole
Booksellers NZ chief executive Lincoln Gould says independent bookshops are some of the most affected by the GST loophole.
“Booksellers, like other retailers, are finding it hard to compete with foreign websites because they start with a 15 percent price disadvantage,” Gould says.
“We know that bookshops throughout New Zealand would sell more books and employ more New Zealanders if the tax loophole was closed.”
The Booksellers Association says locally owned businesses have a more positive economic impact on their communities than foreign websites.
To get word out to the public about the issue, the organisation has created a flier to promote the issue that can be handed out to customers.
It lists 10 reasons why shopping at local businesses benefit New Zealanders.
Action that can be taken
The #eFairnessNZ campaign is asking the government to create a system that overseas companies have to register with to collect tax, just like New Zealand retailers.
The campaign is also advocating a $25 threshold for low value goods, where GST and duty haven’t been pre-paid, to be collected at the border.
Items over $25 would be levied to cover customs and biosecurity clearance.
Members of Retail NZ and Booksellers NZ are also being encouraged to write to their local MPs and tell the public about the effects of the tax loophole on their businesses.
Labour Party leader Andrew Little has backed the issue on Twitter, saying Labour supports a fair tax system.