Legitimate case to retrieve GST from online shopping

university-of-canterbury

Sat Jul 13 2013 12:00:00 GMT+1200 (New Zealand Standard Time)

Legitimate case to retrieve GST from online shopping

Saturday, 13 July 2013, 12:02 pm
Press Release: University of Canterbury

Government has legitimate case to attempt to retrieve GST from online shopping

July 12, 2013

A University of Canterbury (UC) marketing expert says the Government has a legitimate case to attempt to retrieve some revenue from overseas sales of goods and services by New Zealand online consumers.

A joint working party has been set up by Inland Revenue and Customs to investigate collecting GST on imports by online shoppers purchasing goods and services from overseas.

UC marketing professor Dave Fortin says this was not such a problem in the past in a bricks-and-mortar world.

``This is why thresholds were introduced in terms of purchase values to minimise compliance costs on transactions. But in a global digital world, these don’t seem to make much sense anymore.

``Finding a mechanism to collect GST on all purchases would appear to be a fairer system but the hiccup is in the logistics of collection.

``Even by tracking purchases through credit cards and Paypal, there will always be loopholes to get around paying tax. From a consumer perspective, resistance may not be as strong as one could expect for GST on overseas purchases as the price differentials on these items even including shipping are quite sizeable.

``Local retailers feel at a disadvantage but the gap is so much wider than the GST value that it will still be difficult to compete against large players overseas.

``These are called category-killers in marketing speak, such as Amazon.com and UK-based ASOS.com in the clothing area which offer free shipping worldwide. The volume generated and economies of scales are such that it will be very difficult for local players to compete in mainstream markets,’’ Associate Professor Dave Fortin says.

More than half the New Zealand population is now shopping online, according to Statistics New Zealand.

More than 1.8 million people made online purchases in 2012. More than 70 per cent of New Zealanders aged 25-34 years and 68 per cent of people aged 35-44 years were opting for online shopping.

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