As a retailer I would really like to know what the parties are going to do about the overseas online purchases that are killing our shops, mainly the GST issue where overseas purchases under $400 are not liable for GST thus the temptation for people to purchase from other countries instantly saves them 15 per cent. Many candidates talk about our dying high streets and empty shops, what are they going to do about it?
David Clendon, Green Party:
The current GST exemption diverts domestic spending offshore, lowering tax revenues from GST, company and PAYE tax and distorts consumer choices. We support a review on whether GST can be levied on international purchases worth less than $400 to be fairer to local retailers. The Green Party would likely follow any new recommendation made by a reconvened expert review group in threshold levels.
We will also make New Zealand more competitive through investing in research and development so that we have home-grown industries that can become more competitive in New Zealand and worldwide.
Ken Rintoul, Focus NZ:
A paper by the NZ Institute for the Study of Competition and Regulation has shown one of the key drivers of e-commerce is lower online prices. It states foreign retailers have an implicit 15 per cent price advantage over comparable domestic retailers. It also states there is anecdotal evidence of illegally devaluing purchase amounts to enable GST and duties to be evaded.
Focus NZ agrees with all the NZ Institute's findings and views the Government's current tax policy as distortionary, negatively affecting government revenue and domestic retailers. We also recognise the significant flow-on impacts on our economy of having smaller retail businesses closing. It's much more than just a loss of taxable income from GST.
Other impacts on government are: tax losses from reduced NZ retail company profit and reduced economic activity; reduced PAYE tax; loss of GST on operational costs associated with bricks and mortar retail outlets; loss of retail jobs, and if not picked up by employment increases in other industries, there's extra cost to government through unemployment benefit payments, and resultant social costs on both government and communities.
The main argument against dropping the $400 minimum threshold is the enforcement cost due to manual inspection of all packages entering the country.
Focus NZ will seek to implement GST on all overseas purchases of goods and services. We are committed to creating a level playing field for New Zealand companies, committed to reducing their compliance costs, and committed to making their businesses more profitable.
Mike Sabin, National Party:
I'm sympathetic to the fact that retailers are often competing with offshore websites that don't account for GST but it's important that any solution is workable and does not create a major hassle for consumers. The issue is not unique to New Zealand and other countries are struggling to come up with practical solutions.
There are also a range of related issues such as the taxation of online businesses more generally. Accordingly, the Government is looking at the issue in the wider context of the digital economy and is keeping a close eye on international developments which may provide solutions moving forward.
Supporting growth in New Zealand's economy which helps drive greater purchase power and sales while increasing loyalty by New Zealand consumers to buy local and support local commerce is one practical approach we can all be involved in and take, despite the challenges of online sales.
David Wilson, Democrats for Social Credit:
Retailers in small places like Paparoa and Kawakawa are being hit even harder as people either use the internet or travel to Whangarei where their choice is larger and the "big box" retailers are.
But retailers could be significantly helped by our policy of eliminating GST totally (not just on fruit and vegetables). This means the advantage that customers have from using the internet to buy overseas would disappear.
We would replace GST with a Transactions Tax at just 10c per $100 on withdrawals from all bank accounts. Compare that to GST at $15 per $100. That means purchases from overseas or locally would all attract the same tax.
The transactions tax would catch in the tax net, the massive top end market in financial speculation, currency trading and the like, which is currently untouched by the GST regime. Given that New Zealand is the 9th most traded currency in the world, the amount collected from a transactions tax that includes currency trading would be more than the entire GST tax take. Banks already withdraw their own account fees through an automated function of account management. It will be very simple for the banking system to implement transactions tax, and very difficult to avoid payment. Retailers would be saved the cost of administering GST and filing returns.