Retailers likely to be disappointed

Retailers will be disappointed the Government isn't taxing purchases on overseas websites, says Retail NZ's general manager public affairs Greg Harford.

"The Budget is deeply disappointing for retailers," Harford said.

"The Government is moving to introduce new taxes at the border but is ignoring an existing loophole that is costing the country between $200 to $500 million in lost tax revenue at the border," he said.

"The current loophole means foreign firms selling to New Zealanders don't have to pay the same taxes and duties that Kiwi firms do.

"This means foreign websites have an unfair advantage over Kiwi firms."

Not only did the loophole result in lost Government revenue, it also was driving New Zealand firms out of business and costing jobs, he said.

New Zealand's $400 GST threshold for overseas online purchases was the second highest after Australia, and compares to C$20 in Canada and 15 in the UK, he said.

Retail NZ and Booksellers NZ had launched a campaign dubbed '#eFairnessNZ' lobbying the Government to require foreign websites to register for New Zealand GST, Harford said. If foreign retailers did 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, he said.

"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 time-frame for action."

However, PwC partner and GST specialist Eugen Trombitas said the Budget signalled that New Zealand was looking at following Australia's recent lead in taxing services purchased online from overseas sellers.

Low-value goods purchased online will also be looked at, Trombitas said.

"New Zealand can't ignore this issue any longer so it's encouraging to see Budget 2015 confirms this is a key focus area on the tax policy work programme -- the digital economy has a profound impact on GST," he said.

"Making up around 30 per cent of the Government's tax take, GST is a tax on consumption and when this consumption is taking place in New Zealand, GST should be charged.

"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."

- By Brendan Manning of the New Zealand Herald

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