The Retailers' Association says the Government is continuing to subsidise overseas retailers by 15% because they are still allowed to sell goods here without paying GST.
It says that under New Zealand's importing regulations and taxation laws, purchases under $400 are GST free.
Online auction website Trade Me has struck a deal with an e-commerce software company that helps more than 3000 retailers worldwide sell their products online through a streamlined process.
Chief executive of the Retailers' Association John Albertson says his members are angry that overseas retailers get the sales without giving the customers any personal service.
"They get an awful lot of service from the store and they note the model number down, say 'thanks very much' walk out and go and buy it from an offshore site and save the GST and duty."
Mr Albertson says if the Government is going to tax consumption it should should tax all consumption.
He says the rules are inconsistent and estimates the Government is losing $100 million a year in tax revenue.
"Given the financial state of the country at the moment one would suggest that that's probably not a smart thing to be doing," he says.