Shoppers not fazed by incoming online shopping tax

Packages stand on a conveyor ready for delivery. Photo / Getty Images

It seems Kiwis are not phased by potentially having to paying a bit more at check-out once Government starts collecting GST on overseas online purchases.

Consumer research conducted by Canstar shows Kiwis will largely not be deterred from shopping online despite the prospect of having to pay more for low-value goods valued under $1000 from overseas websites.

From October 1, overseas retailers will be required to collect GST on low-value goods if their total sales to New Zealand consumers exceed $60,000 per annum.

This means Kiwis can expect to pay 15 per cent more on current prices, in line with what Government will require international merchants to collect and file.

For example, a product currently priced at $100 could cost $15 more once GST collection on low-value goods begins later in the year.

Canstar research, which surveyed more than 1600 New Zealanders who have brought something online in the last 12 months, found just 29 per cent of people will be put off from shopping online when the new rules come into effect.

A third of respondents surveyed said they did half of their shopping online and 15 per cent said they use it for everything.

About 70 per cent of people cited convenience as the main reason they shopped online, followed by the ease of finding items, then price.

Retail NZ general manager of public affairs Greg Harford said the association expected GST collection to impact the margins of international merchants.

"There will be some small movement in prices which will bring them perhaps more into line with the prices paid domestically.

"Some of those bigger firms may choose to just maintain their prices" Harford said.

"The biggest impact will be simply those foreign businesses will no longer have that 15 per cent price advantage over the Kiwi firms."

But Harford said he did not believe price hikes would change Kiwis' shopping habits. "The tax in itself isn't going to be a massive game changer in consumer behaviour - consumers are shopping online and overseas for a range of reasons, GST is part of that, but they are also looking for range and brands that aren't available in the New Zealand market."

Online shopping accounted for 8 per cent of all retail spending in 2018. This figure is forecast to grow to 13 per cent by 2030.

"Online shopping continues to grow, and grow fast - at around 10 per cent in dollar terms year-on-year. It's really convenient and consumers appreciate being able to shop wherever, whenever they like, but I don't think though that online shopping is going to be replacing physical shopping anytime soon."

Duty will not be collected on items valued under $1000 under the new tax rules which is still seen as an issue for New Zealand's retail sector.

Domestic retailers pay 10 per cent duty on such items whereas a foreign retailer selling into New Zealand is not. Items such as clothing, footwear, jewellery and sporting goods typically have duty on them.

While overseas websites often boast more choice and lower prices, Canstar New Zealand general manager Jose George said New Zealand sites could compete on speed of delivery and quality of service.