New Zealand is currently seriously disadvantaged by a loophole that means that people do not pay GST or duty on low-value purchases (generally goods less than $400 in value) when they buy from foreign websites. This creates a reverse tariff which unfairly discriminates against Kiwi retailers. Booksellers NZ have worked hard alongside Retail NZ for many years to level the playing field for local retailers including our membership bookstores.
Booksellers NZ firmly believes it is the responsibility of parliament to ensure GST is a universal tax by requiring all retailers – whether they operate online, in bricks-and-mortar stores, or a combination of both – to fulfil their obligation to collect sales tax. See Lincoln speaking on this to Fairfax recently.
What we are proposing is neither a new tax nor special treatment for independent bookstores – it is an equitable and consistent enforcement of existing GST laws.
On 15 November 2017, this article ran on Stuff, indicating that the new government has committed to making this change. Revenue Minister Stuart Nash has noted twice to media today, that it is the firm intention of the Labour goverment to start collecting GST for all online offshore purchases, though he has not yet provided a date for implementation.
Locally owned businesses have far greater positive economic impact on their communities and are largely responsible for our communities retaining their unique characteristics. The current de minimis threshold enabled offshore online retailers to hold a 15 percent competitive edge over local businesses and contributesdnothing to the sustainability of the New Zealand economy.
The Government will now be able to collect at least $200 million a year in revenue from low value goods, not counting GST that would otherwise be paid on cross-border services and digital downloads delivered into New Zealand.
What is GST Fairness? (Also called eFairness)
E-Fairness, or sales tax fairness, calls for the equitable enforcement of GST as a universal tax. Currently, bricks-and-mortar retailers are required to collect and remit sales tax on customer purchases, while offshore online retailers are allowed to sell customers the same products with no responsibility to collect GST if it falls below the existing de minimis threshold. This places local retailers at a severe disadvantage and has prompted Booksellers NZ to act on behalf of our members.
E-Fairness Action Kit
- What Government needs to do
- Key things to know
- What can the Government buy with $200 million?
- Other links
- Require overseas companies to register for GST, and collect the tax just like any other retailer does.
- Introduce a lower threshold for low value goods or abolish the threshold - where GST and duty has not been pre-paid, this should be collected at the border before the items are released.
- Levy a fee on goods worth more than $25 to cover the cost of Customs and quarantine clearance, as happens in most other countries.
- New Zealand is out of step with most other countries.
- Canada has a CAD 20 threshold and the UK has a GBP 15 threshold. Tax is collected on all imports over these levels, as well as a fee to cover the costs of Customs clearance.
- The Government is missing out on huge amounts of revenue as a result of the current loophole – enough to fund at least 4,345 new first-year primary teachers or more than 9,000 hip replacements.
- The current loophole makes it hard for Kiwi retailers to compete with foreign websites that don't contribute to New Zealand.
- The Government is looking at this issue through the OECD but most countries already charge tax on low value items crossing the border. The Government can and should take urgent action to close the loophole.
- Check out the media links, template letters, submissions and other handy tools that Retail NZ have provided on their website to help engage your customers and communities in the debate: www.retail.kiwi/eFairnessNZ
- 4,345 new first-year primary school teachers
- 9,091 hip replacements
- six Radio New Zealands
- 1,484 backbench MP salaries
- 396,747 weeks of paid parental leave