29 Sep 2017

Small business owners challenge GST threshold

10:56 am on 29 September 2017

Retailers fed up with being shop windows for online buyers are pushing again for the government to collect GST on lower value imported goods.

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Nelson bookseller Jo Dippie: "We get customers come in with their cellphone, they stroll around, they look at all the books, they take photos and then they depart." Photo: RNZ / Tracy Neal

Last year the government said overseas companies selling digital products and services online to Kiwis had to register for GST, but the shift excluded large companies selling small items totalling less than $400.

Retail New Zealand spokesman Greg Harford said the government was doing itself out of an estimated $235 million a year in GST revenue as a result.

"At the moment the government effectively applies a reverse tariff against New Zealand firms, and allows foreign businesses to do business here, without paying their fair share of taxes and fees at the border."

Mr Harford said small businesses importing goods with a combined value of more than $400 bore the burden of biosecurity and import entry fees.

Government figures show it has collected almost $50m in fees since 2009, made up of $13.3m in biosecurity system entry fees, $26.4m in import entry transaction fees and $10m in variable biosecurity fees.

The owner of Nelson independent bookstore Page and Blackmore, Jo Dippie, said not only was she losing business to online shoppers, she had also become a shop window for them.

"We get customers [coming] in with their cellphone, they stroll around, they look at all the books, they take photos and then they depart. You know they're going to go and order off Amazon, or whoever."

Booksellers New Zealand head Lincoln Gould said the failure to require GST on small goods gave large overseas companies, such as Amazon, a competitive advantage over small local businesses.

"We're saying, with the impact of online sales into New Zealand - which is creating a 15 percent competitive advantage to offshore, online retailers - that the loophole should be closed."

Mr Gould, who runs Messine Bookshop in Featherston, said booksellers have been campaigning for change for about seven years.

He said efforts to close the loophole had been mired in political concern about a consumer backlash.

Mr Gould had lobbied the Minister of Revenue as recently as July, and was told in a statement that Inland Revenue, Treasury and Customs were looking into it.

Mr Harford said a move by the Australian government to require foreign firms to register for Australian GST could create an absurd situation in New Zealand.

"A New Zealand retailer will have to register and pay Australian GST to the Australian government when selling into that market, but Australian firms can sell into New Zealand without paying GST to the New Zealand government.

"It's not right, it's costing the New Zealand taxpayer money, and fundamentally it's unfair for Kiwi businesses."

Mr Harford hoped a review of the tax loophole would become a priority for the new government.

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