13 Apr 2015

Campaign to close GST loophole

3:00 pm on 13 April 2015

Retail NZ and Booksellers NZ have launched a campaign to close a loophole which allows some low value goods to be imported free of GST and duty.

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Photo: RNZ / Diego Opatowski

The industry groups said their members were finding it hard to compete with international retail websites, because they have to add 15 percent GST, which puts them at a competitive price disadvantage from the get-go.

Retail's chief executive Mark Johnston said the government should set up a system for overseas companies to register for GST and collect tax just like New Zealand-based retailers.

At the same time, he said customs should charge consumers the GST, duty and any transaction costs on all imported goods over $25.

Mr Johnston said the GST should also be charged on online subscriptions and downloads.

"Taxes like GST are supposed to be applied universally.

"Low value thresholds apply in other markets too, but they are generally much lower than ours - at between $20 and $30.

"In New Zealand, you can generally import goods worth up to $400 before needing to pay tax. This just isn't fair."

Mr Johnston said it would be simple to close the loophole and it would be simple to register oversesas retailers for GST.

Booksellers' chief executive Lincoln Gould said independent bookshops were among the small businesses most impacted by the current loophole.

"Booksellers, like other retailers, are finding it hard to compete with foreign websites because they start with a 15 percent price disadvantage.

"We know that bookshops throughout New Zealand would sell more books and employ more New Zealanders if the tax loophole was closed," he said.

The industry groups will be writing to politicians as part of the #eFairnessNZ campaign.

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