The New Zealand Retailers Association has reiterated its call
for GST to be applied to all online purchases after the boss
of Australasian clothing seller Hallenstein Glasson
criticised the "failure" of the tax systems on both sides of
the Tasman to collect the consumer tax on sales from overseas
And new research released by the BNZ yesterday showed Kiwis'
spending with overseas online retailers grew at almost four
times the rate of domestic web-based spending last month.
At present New Zealand consumers can avoid GST on many goods
bought for less than $400 from foreign internet retailers,
such as Amazon. The threshold is lower for items to which
duties apply, such as footwear and apparel.
In Australia the GST-free threshold is set at A$1000 ($1090).
Hallenstein Glasson chief executive Graeme Popplewell told
shareholders at the annual meeting yesterday that it was hard
to measure how much business the company was losing to
international brands and "pure play" websites, but it would
be naive to suggest there was no impact.
"What we do know is that the failure of the tax system in
both New Zealand and Australia to collect GST from sales made
by international websites to our customers puts us at a clear
disadvantage," Popplewell said.
"I don't want to sound like sour grapes, but we are competing
with an e-commerce world where profit margins are low or
nonexistent and competition for market share is the name of
Hallenstein Glasson's forecast of a 20 per cent decline in
half-year profit would "come under pressure" if summer season
sales did not improve to above last year's level, chairman
Warren Bell told shareholders.
Retailers Association spokesman Russell Sinclair said
pressure was growing on the Government to collect GST on all
online purchases. "With GST not applying to those imports the
Government is subsidising the offshore retailers," he said.
"It's not a level playing field."
The Inland Revenue Department and Customs have set up a
working group to look at the issue and Sinclair said the
group was expected to deliver a discussion paper before
"Submissions will be called for before the end of March."
New Zealanders' online spending with overseas retailers rose
about 20 per cent in November on the same month a year
earlier, compared with just 5.5 per cent growth in domestic
online spending, according to the BNZ's Online Retail Sales
When national children's clothing retailer JK Kids announced
last month that it was closing, the company blamed intense
competition from overseas websites, as well as the global
economic downturn, for the demise of the chain, which
employed about 125 staff.
"In terms of competition we're seeing quite a big impact from
mothers, particularly younger mothers, buying online," JK
Kids managing director Ben Sproat said.
"They're able to buy from the UK, the US and many outlets
over there are offering freight free if you spend over a
Briscoe Group managing director Rod Duke - whose company
operates Briscoes, Rebel Sport and Living & Giving Stores
- said the present situation was unfair and GST should be
applied to all purchases.
"It just seems to me to be a really unusual situation," he
Some Kiwi shoppers, of course, may argue that New Zealand
retailers charge exorbitant margins and the status quo with
regard to tax on overseas purchases should remain in place.
Consumer NZ chief executive Sue Chetwin has said that
although she feels some sympathy for retailers, goods
purchased overseas could be 50 per cent cheaper than the same
"It's not just the 15 per cent [GST] - it's a hell of a lot
more than that," she said this year.
Another difficulty would be introducing a system that could
collect GST on all goods coming into New Zealand.
At the moment, if tax or duties apply to an imported item the
buyer receives a letter from New Zealand Post instructing
them to contact Customs and arrange payment.
In July Customs Minister Maurice Williamson said it would be
virtually impossible to find an effective system to collect
tax on all purchases.
Kiwis' online spending in the year to September 30 2013
Overseas retailers$1 billion
Domestic retailers$1.7 billion
- Christopher Adams of the NZ Herald