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Kiwi retailers disadvantaged by Budget 2015

22 May 15

The NZ Retailers Association has criticised the government’s Budget 2015 announcements yesterday, saying retailers will disappointed the government will not be taxing purchases on overseas websites.

Greg Harford, Retail NZ’s general manager public affairs, says retailers will be disappointed that the government has failed to take action to close a loophole which disadvantages small and large Kiwi businesses because foreign websites ‘don’t have to pay their fair share of GST and duty’ when selling low value goods to New Zealand.

“The Budget is deeply disappointing for retailers,” he says. “The Government is moving to introduce new taxes at the border but is ignoring an existing loophole that is costing the country between $200-$500 million in lost tax revenue at the border.”

Harford says the current loophole means foreign firms selling to New Zealanders do not have to pay the same taxes and duties that Kiwi firms do. “This means that foreign websites have an unfair advantage over Kiwi firms, which are forced to collect GST and pay it to the Government,” he says.

“It is doubly unfair that Kiwi retailers selling goods to customers in most other countries have their goods stopped at the foreign border, and customers have to pay tax and fees before items are delivered,” he explains.

“New Zealand has the second-highest low value threshold in the world after Australia, and both our countries are seriously out of step with most other jurisdictions.

“Our $400 threshold compares to $20 in Canada and £15 in the UK.”

Harford says this issue can be resolved reasonably simply, and the NZ Retailers Association is deeply disappointed that the government has not acted in this year’s Budget to close the loophole. “Not only does this loophole mean that the government is missing out on revenue it desperately needs to reduce the $684 million deficit, it is also driving New Zealand firms out of business and costing jobs,” he says.

"Retail NZ and Booksellers NZ are running the #eFairnessNZ campaign asking the government to require foreign websites to register for New Zealand GST. If a foreign retailer does not collect GST at the point of purchase, items worth more than $25 should be stopped at the border pending payment of tax, duty and any clearance fees,” Harford states.

Harford says closing the eFairness loophole will allow New Zealand retailers to compete on a level playing field with international suppliers, save Kiwi jobs and help town centres throughout the country thrive. “It’s time for the government to commit to a timeframe for action.”

However, as reported by Techday yesterday, Eugen Trombitas, PwC partner and GST specialist says Budget 2015 signals that New Zealand is looking at following Australia's recent lead in taxing services purchased online from offshore sellers.

He says, “New Zealand retailers and businesses have been insisting on a level playing field and there’s a danger we could fall behind the international pace and best practice if nothing is done soon.”

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