Nearly 40 per cent of New Zealanders believe GST should be
charged on all purchases made on foreign shopping websites, a
survey has shown.
The Government is estimated to miss out on up to $300 million
in sales tax each year.
But New Zealand retailers struggling to compete with overseas
sellers - whose sales are exempt from GST when they are for
less than $400 - will have to wait for any decision on a
Revenue Minister Todd McClay says the Government wants to see
what other countries do first and a discussion document on
the issue, due before Christmas, has been delayed until next
Kiwis flocked to the shops yesterday for the annual Boxing
Day sales - but many are increasingly buying cheaper online
A Herald-DigiPoll survey this month found that almost 55 per
cent of the 750 New Zealanders polled had bought goods from
Of those surveyed, 53 per cent said the $400 exemption should
not be removed as the tax would be too inconvenient to
Surprisingly, just under 40 per cent - 38.5% - agreed with
the view of the Retailers Association that the 15 per cent
GST should be applied to all overseas online purchases to
level the playing field for local retailers.
Trade Me spokesman Paul Ford said a law change would not be
great news for clients who buy stock from overseas to sell on
the auction website.
Retail industry sources said because more than 50% of the
public opposed introducing GST on online purchases under
$400, the Government would be reluctant to move on the issue
during an election year.
Mr McClay said he was unsurprised by the poll result and it
reflected the competing interests of consumers and retailers.
While he has officials working on that and other issues
related to taxing the digital economy, the minister said the
issue would remain in the too-hard basket for the time being.
"If we're to find any solutions, it's going to be really
important we find one that will work both for the retailers
of New Zealand and consumers. It's not clear how that can be
Mr McClay decided to delay release of the discussion document
after a recent visit to Europe, where he spoke with the
European Commission and a number of other authorities about
taxing online sales.
Those talks included consideration of wider issues around tax
base erosion and profit shifting (BEPS), or in simple terms
large international firms funnelling revenue from one country
to another to minimise tax.
Mr McClay told the Herald that tax on online purchases was
"not an issue New Zealand can solve by itself".
"I probably came away (from Europe) with the view that
they're all concerned and considering the issue, approaching
it slightly differently, and none of them have a solution at
"Based on that, I have asked officials to do a bit more
Labour Party revenue spokesman David Clark said the
Government "needs to explain to New Zealand businesses why
they should be disadvantaged by having GST collected when
overseas business don't face that challenge".
"It seems it would be pretty simple to speak with Amazon and
other suppliers to ask them to collect GST since they
collect, as I understand it, sales taxes for individual
states in the US. If that's true, then it's obviously an
ideological decision from the Government not to collect it."
John Albertson of the Retailers Association, which has been
lobbying for action on the sales-tax issue, said there were
viable solutions, particularly given recent technological
advances in systems for paying by credit and debit cards.
"If we can't collect a tax from the card issuer (banks) as
part of that payment process, I would be surprised."
If an agreement could be reached with PayPal as well as banks
to collect sales tax, Mr Albertson said, "you've got most of
"It will require legislation and it will require some
technology to be imposed on the banks. That will have a
capital cost but I'm sure if the Government is going to
collect $200-300 million a year, they can see their way clear
to defray the costs to the banks."
Consumer NZ chief executive Sue Chetwin was unavailable for
comment yesterday, but told Radio NZ this year that getting
banks to collect GST on behalf of online retailers would be
fraught with difficulties and was "doomed to fail".
She said it would be unworkable, as banks can't tell whether
a person is overseas shopping or sitting at a computer in New
Ms Chetwin was also concerned that banks would charge a fee
for collecting the tax - another cost to be passed on to
• $5b - Value of online purchases in 2013
• $2.5b: Value of overseas online purchases
• $200m-300m: Estimate of lost GST and duty on foreign online
- Retailers Association estimates