GST rise will give overseas web firms edge say retailers

Retailers say the looming rise in GST will give online merchants overseas an even bigger price advantage.

Private imports under $400 in value come into the country free of GST so the rise from 12.5 per cent to 15 per cent - likely to be announced in next week's Budget and imposed in October - makes overseas-sourced goods even more attractive.

The sharp appreciation of the New Zealand dollar against European currencies during the past six months has made online shopping even cheaper, although retailers who import from that region have also benefited.

Retail Association chief executive John Albertson said his members wanted GST on all goods bought privately overseas, excluding gifts. This would help New Zealand businesses and give the Government tax revenue worth as much as $500 million.

"It's not a fair cop. We don't mind competing but it's very hard competing with 15 per cent already tied behind your back," he said.

"We are not wanting to turn the clock back and deny the existence of web sales but we would appreciate a level playing field."

Especially galling for retailers was when customers used them to research products in their shops then bought them through overseas websites.

"You'll get people putting staff to tremendous trouble trying on sports shoes, say 'thanks very much' and go off an buy them online," Albertson said.

It is estimated between $1.2 billion and $3 billion is spent on goods by New Zealanders and, according to researchers The Nielsen Company, 17 per cent of this is spent overseas.

Most overseas online shopping is done in Australia and the United States.

Easy-to-ship goods such as DVDs, CDs, computer software and books are the most popular, accounting for more than 35 per cent of online buys abroad in each category.

More than 40 per cent of online spending on travel-related services is done through overseas websites, Nielsen says.

Albertson said the problem of tax on online purchases was an international one. In the US courier companies were charged with collecting state taxes in some cases. Albertson said it might be possible to collect tax through credit-card transactions.