Should internet shoppers and tourists pay GST?
Verve magazine – July issue – By Cameron Brewer – Councillor for Orakei:
The internet is a wonderful thing and no doubt international online transactions see the Inland Revenue Department miss a lot of potential taxation opportunities. Investigating the scale of the problem, where the loopholes lie, and legislating any practical and cost effective solutions could be a task for the new Minister of Revenue, Todd McClay.
The increasing role of online shopping causes traditional retailers much frustration when already they’re up to their eye balls with rates, rent, import duties, GST, and compliance costs.
Customs says for people getting purchases sent from overseas, GST has to be paid on items worth more than $400, and apparel and accessories worth more than NZ$225 are liable for duty. The reality is this GST and duty rarely gets paid, largely because people simply don’t know or care, and Customs hasn’t the resources to open every small parcel and assess its value.
The New Zealand Retailers’ Association cries foul as their members see their overseas competition basically enjoying a tax emption, which makes online shopping only cheaper and more attractive.
Kiwis spend about $1 billion a year on online purchases from overseas sources, which is rapidly on the increase, helped by the high dollar. I’m into free trade but I also want a relatively level-playing field and greater fairness for our hard-working retailers back home.
Another thing for the new Minister of Revenue to consider is a tourist refund scheme akin to what Australia has.
Tourists leaving Australia can claim GST back on purchases over $300 by merely presenting their goods and receipts at the airport. If GST refunds were made that easy here, the annual tourism spend would be boosted, as happened in Australia over a decade ago.
At the moment, if tourists to New Zealand are to avoid our 15% GST, retailers have to be registered with Customs, and goods have to be sent out to the airport at the cost of the retailer.
If the Australian TRS model was adopted, there would be no extra costs for our retailers. They would merely market the GST-free scheme as a good reason to spend more in their shops, which would undoubtedly lead to an increase in tourism expenditure, and overall lift the nation’s tax take.
Mr McClay has a lot to think about on how the Government can boost its revenue.
For more news and views visit www.cameronbrewer.co.nz
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