Kiwis set to pay 15% GST on goods costing under $400 bought online from overseas.
Veteran bookseller Tilly Lloyd is delighted that her business will now be in a fair fight with overseas sellers for the book lovers' dollar.
Lloyd is the co-owner of long-standing independent bookshop Unity, which has shops in Wellington and Auckland.
She hosted Revenue and Small Business Minister Stuart Nash and Customs Minister Meka Whaitiri in her Wellington shop today as they announced that overseas websites selling low-value goods to Kiwis will have to collect GST from 2019.
"This is brilliant news for our customers who are part of millions of local New Zealand customers who are shopping locally and paying GST and until now being penalised for their localism," Lloyd said.
Before he spoke at the event, Nash bought a thick book of Rolling Stone magazine covers. It cost him $60, including GST.
Hart, who opened the store 37 years ago, said it would be difficult to measure any immediate benefit once the changes were brought in but he was optimistic.
"It's going to be hard to measure because turnover does fluctuate quite hugely from one week to another. But overall, I'm pretty sure it's going to have an effect."
Small Business and Revenue Minister Stuart Nash says it's unfair that overseas online retailers don't collect GST, and he's changing that. Photo / Lucy Bennett
Booksellers NZ chief executive Lincoln Gould said the move was not a silver bullet for New Zealand retailers, "but it does take away that 15 per cent impost from bookshops and other small retailers before they even open their doors.
"It will mean, over time, more people being employed in book shops and other small retailers, and better health of smaller communities around the countries."
Booksellers offered Kiwis something that the big overseas online sellers such as Amazon could not, he said.
"It's the community hub that bookshops provide in local areas which the Internet can't really compete with."
Under the plan, overseas retailers selling to New Zealanders online will be required to be registered for GST and collect it on goods valued under $400.
That will impact people who buy such goods as clothing, shoes, books and music from overseas websites.
"Domestic businesses have long called for greater fairness in the treatment of low-value goods from offshore retailers," Nash said.
BusinessNZ chief executive Kirk Hope said while retailers would welcome the move, there were benefits for customers as well.
"It would not mean extra compliance for New Zealand customers, and it would provide some certainty around pricing of imported goods," he said.
Buy NZ Made Campaign acting executive director Anna Heyward said the plan would level the playing field for New Zealanders making and selling products here.
Submissions on the proposals are due by June 29, 2018. The discussion document can be found at taxpolicy.ird.govt.nz
Online buyer supports change
Wellington man Lee Slater, who regularly buys from overseas retailers including Amazon, said if the price difference was marginal, he chose a New Zealand retailer.
But when he bought gifts for family living overseas or 20 music CDs at a time, the price difference was so large that he bought from overseas online retailers.
"If I purchased all of my foreign CDs from [local music stores] it would be twice as much, possibly even more. In those situations, I really want to support local, and I do, but sometimes money talks unfortunately," he said.
But Slater supported today's announcement.
"It's going to hit me more in the pocket, but I think it's fair."
Q&A
How does it work?
GST will be charged at the point of sale when the value of the goods is $400 or less. Consumers do not pay the GST, the seller does.
The rules will apply when the goods are outside New Zealand at the time of supply and are delivered to a New Zealand address.
Offshore retailers will be required to register and collect GST if their total sales to New Zealand consumers exceed NZ$60,000 per annum. In certain circumstances, marketplaces and redeliverers may also be required to register.
This is the same threshold that applies to domestic businesses and to offshore suppliers of cross-border services.
Customs tariffs, border security fees and biosecurity cost recovery charges will be removed from goods valued at or below $400 so for some consumers their goods will be cheaper.
There is no change to goods valued above $400, where the current process for collecting GST and tariff duty at the border will continue.
Why is the Government doing this?
It is a question of fairness. Smaller retailers, especially those who operate outside large shopping centres, struggle against foreign competitors who enjoy a tax advantage.
All domestic retailers have GST added to the price tag of their goods. The proposed measures will help to restore balance.
When will it begin?
October 1, 2019
How much revenue will be collected?
Conservative estimates are $53 million in 2019/20, $78 million in 2020/21, $87 million in 2021/22.
What happened when GST was collected from offshore sellers of services such as Netflix after the law changed on 1 October 2016?
More than 200 offshore suppliers registered for GST under the new rules. More than $162 million has been collected, well above estimates of $40 million per year.
