Prime Minister Jacinda Ardern on 'Amazon' tax: GST not new

Prime Minister Jacinda Ardern. Photo / Marty Melville

Prime Minister Jacinda Ardern says imposing a 15 per cent GST component on items purchased online from overseas does not constitute a new tax.

The Herald and Newstalk ZB revealed that the Government is poised to today announce the extension of GST to online purchases from overseas of under $400 - the so-called "Amazon" tax.

The GST would be levied on foreign firms. It is expected to yield about $64 million in its first year, rising to $81 million in two years with growth in online shopping.

The Herald report said that many people would see the extension as a broken promise by Labour, which had committed to no new taxes in its first term.

Ardern told Newstalk ZB's Mike Hosking that the policy, to be formally announced at 11.30am today, would be an extension of GST.

That meant, Ardern said, answering Hosking's probing on whether it was a new tax, that it was not.

"No one would argue GST was a new tax," the Prime Minister said.

The extension would provide the fairness that New Zealand retailers had been asking for, she said.

Before the last election, Labour promised not to implement tax changes this term arising from the tax working group.

But applying GST to low-value goods was specifically ring-fenced from that promise by Labour's revenue spokesman at the time, Michael Wood.

The process was already being developed in the system by IRD under the National-led Government.

GST is payable on all goods bought in New Zealand, including online purchases such as books bought on Amazon or Book Depository or goods from Alibaba and e-Bay.

But the cost of collecting it on small items such as a $40 book means it is not collected.

Today's announcement is likely to find a way to make large sellers comply with New Zealand law by registering and collecting GST.

While the tax will be paid by the foreign firms selling the goods the cost would inevitably be passed on to the buyer in the form of increased prices.