New Zealand Revenue Minister Todd McClay has signalled he has been studying other countries’ GST laws with interest, so Australia making a move may have an effect on his decision making.
The Sydney Morning Herald has reported that Australian state treasurers will be asked to consider the proposal at their next meeting on 21 August.
Many of the treasurers are expected to vote in favour of it.
There is already a GST tax on digital imports, but Federal Assistant Treasurer Josh Frydenberg is keen to extend the ruling to include physical goods.
This would be welcome news for Australian retailers, as the Australian National Retail Association and the Shop, Distributive & Allied Employees Association have been lobbying to get the GST-free threshold decreased.
The Sydney Morning Herald also reported that Treasurer Joe Hockey, who previously gunned for the digital imports tax, hinted at big changes underway at a business summit.
He told the summit he’d found a way to ensure that goods from overseas didn’t get any advantage from the tax-free threshold.
“This is hugely important for small business,” Hockey said.
“How do I say to a bookseller in Lane Cove that they have obligations to pay tax, but Amazon selling the same book from overseas doesn’t? It’s unsustainable.
“It’s been hard to plug but it’s got to come to an end.”
This GST tax would align Australia with Canada, which has a GST threshold of C$20, Britain, which has a £15 tax and the United States, which has no tax threshold at all and subjects all parcels to a tax.
This leaves New Zealand out in the dark with its $400 tax threshold.
There has been immense pressure on the Government from organisations like Retail NZ and Booksellers NZ to tax overseas goods under this threshold, but progress seems to be slow moving.
Retail NZ slammed the Government’s 2015 Budget in May for its failure to act on GST on low-value imports.
General manager public affairs Greg Harford said this issue could’ve been resolved “reasonably simply” in the budget, but was instead ignored.
Meanwhile, the latest data from Nielsen shows that New Zealanders are buying 18.2 million items online each year, to the value of $4.6 billion.
This figure is expected to rise to $4.8 billion by the end of this year.
Prime Minister John Key has previously said adding GST is inevitable, but just how soon it will happen is the question on everyone’s minds.
Many believe if our neighbours across the ditch lower their GST threshold, New Zealand will follow in its footsteps.
New Zealand Revenue Minister Todd McClay told Stuff earlier this year that hasn’t ruled out a single trans-Tasman tax registration process.
However, he said it might raise some issues.
“Earlier in the year I did have conversations with my counterpart in Australia and we did agree that where there were opportunities to cooperate we would investigate those,” McClay said.
A discussion paper by IRD is in the works around the current online GST regime in New Zealand.
This is expected to be available for public consultation by the end of the year.
For now, retailers here will continue to watch Australia’s movements with bated breath.