Editorial: Online taxing change needed

Rotorua MP Todd McClay

Bay of Plenty and Rotorua retailers will no doubt welcome news that the threshold for paying GST on foreign products bought online could be cut to $20 or even zero.

New Zealand officials are working closely with those across the Tasman on moves to lower the threshold for paying GST on goods purchased from Amazon, Apple and other overseas companies.

Australia has the highest threshold for imported goods in the OECD at A$1000 ($1106). But as online shopping continues to rise, its Government may want to slash that to A$20.

New Zealand's limit is $400. Online purchases from abroad rose by 29 per cent in New Zealand last year, and retailers say the GST loophole is hurting local businesses and depriving the Government of revenue.

Revenue Minister, and Rotorua MP, Todd McClay is tipped to present a paper on the issue this month.

Prime Minister John Key says the Government has not yet discussed what New Zealand's new threshold could be, but it would definitely have to be lowered.

Understandably, Retail New Zealand's general manager of public affairs, Greg Harford, has welcomed the Government's review of online GST rules because the current system created an uneven playing field.

The impact of this is being felt in town centres across New Zealand.

Many of the difficulties faced by retailers has been attributed to internet shopping.

In the past, we've been told that some retailers feel like a "sampling emporium" for people who go into shops only to check out products that they intended to buy online.

Local retailers should not be penalised for paying for store fronts that add to the vibrancy of a city's town centre.

While the introduction of a GST for online shopping will mean an increase in the cost of purchasing goods for consumers, there will be benefits for local shopkeepers and Government income. I'm glad the Government is looking to address this loophole. I only wish they had done something sooner.