FOR SEVERAL years, local retailers have grumbled that, tax-wise, they don't compete on a level playing field with increasingly popular international online sellers. Now action is imminent, they have been left with yet more cause for complaint. The Government has elected to tackle only the easiest aspect of this issue, leaving most retailers no better off. In the interests of consistency and fairness, a solution that satisfies all retailers is needed quickly.
At the moment, it is proposed only that overseas online suppliers of "intangibles", such as downloaded books, music, videos and software, will have to pay GST. This will mean the likes of Netflix and iTunes must register with Inland Revenue and collect GST on their sales on behalf of the taxman. Major beneficiaries will be New Zealand suppliers of digital entertainment, such as Sky Television and Spark. But extending this principle to collecting GST on low-value physical imports, such as printed books and electronic equipment, is an altogether different matter.
Revenue Minister Todd McClay notes this has not been attempted elsewhere, and collecting GST on such goods at the border is fraught with difficulty. Customs and IRD officials have examined this for some time. They and their overseas counterparts face the same problem: making the tax take worth the cost of collecting it. With all that in mind, the Government has put out a discussion document, effectively postponing action indefinitely.
But Australia's announcement on Friday that it will bring all overseas internet suppliers into the GST net from July 2017 means that position will soon be untenable. The Australians are confident they can surmount what Mr McClay describes as "logistic issues". These include the sheer number of businesses involved. The bigger ones, such as Amazon, may agree to collect tax, but many of the smaller ones would not find that worthwhile. They could stop supplying New Zealanders, or not comply.
But if Australia's initiative works well enough, this country should be quick to follow suit.
