Retailers unite, call for GST legislation changes pronto

Retail organisations are calling for online GST legislation to be changed in line with Australia's. Photo / 123RF

The New Zealand Council of Shopping Centres (NZCSC) and Retail NZ are calling for the Government to pick up the pace on its "commitment" to make foreign websites pay their fair share of GST.

Earlier this week Revenue Minister Stuart Nash said the Government would "absolutely" extend the current law to cover goods and services purchased from overseas, but Finance Minister Grant Robertson later stepped in saying the Government was still only looking at the issue.

Currently, no GST has to be paid on goods worth less than $400.

NZCSC chairman Campbell Barbour said the ongoing tax loophole supported foreign businesses and not local businesses.

"With New Zealanders able to import goods at zero GST, local retailers are automatically trading at a 15 per cent disadvantage, that's just anti-competitive," Barbour said.

"It disadvantages local retailers operating through both bricks and mortar stores and online."

Barbour said it was important the Government picked up the pace on making the legislation change, pushing that it should align with Australia's GST law change which will come into force from July next year.

"We're glad to see the new Government is taking action, as enabling a level playing field for local businesses is fundamental to supporting the economy, but we are urging progress rather than more discussion and analysis," he said.

Retail NZ estimates that the GST loophole is costing the Government approximately $235 million per year, or $5.8 billion over the next 10 years.

Greg Harford, general manager of public affairs at Retail NZ, said the organisation was asking Nash to stand by his commitment to 'absolutely' fix the problem.

"The current position is simply unsustainable and is not realistic for the Government to continue with a regime that imposes costs on domestic businesses while rewarding offshore companies," Harford said.

The looming launch of Amazon was making the matter more urgent, he said.

"We understand that there is some detail to work through, and that a timeline needs to be established. We would be deeply disappointed if the minister were now to say that the Government is not committed to resolving the problem.

"This issue is becoming substantially more urgent with the move of Amazon into the Australian market, and the implementation of GST registration requirements for offshore companies by the Australian Government."

From July next year New Zealand businesses will be required to pay 10 per cent GST to the Australian Government if they have sales to consumers of more than A$75,000 ($83,000) a year.

In a statement to the Herald, Nash said the Government was committed to making the tax system fairer for all New Zealanders.

"The Government's tax working group will look at GST on online goods and services as this is also a fairness issue," the statement read.

"Work is already under way on this issue and it will be incorporated into the working group's considerations, who will be given the ability to make an early recommendation on this matter as appropriate."