National desperate for money | The Jackal

11 Jul 2013

National desperate for money

Today, the NZ Herald reported:

Good news for New Zealand retailers now the Government has committed to look at taxing purchases made on overseas websites.

Inland Revenue and Customs will work together to review whether GST can be levied on international purchases worth less than $400.

I wonder what ever happened to National's 'wave goodbye to higher taxes' promise?

Retailers Association spokesperson John Albertson says that is making hard work for local retailers who are facing taxes on all sales regardless of whether they're online or not.

"It's often quoted that some New Zealand retailers aren't competitive, it's far cheaper to buy overseas, etc.

"Well in some product categories that may well be true, but let's start from the same starting point where we're both paying GST."

This is very misleading, as bulk importers effectively don’t pay GST on imported goods. GST is only payable when the item is sold in a store. With most products being imported these days, this new tax will only benefit the middlemen, and not retailers or consumers.

The Retailers Association says GST needs to be introduced on purchases made on overseas websites immediately, or more Kiwi retailers are going to suffer.

You’ve got to wonder if John Albertson and the government has thought this one through properly? Imposing GST on all online purchases made overseas at point of sale isn’t feasible, because the New Zealand government has absolutely no say in how websites like eBay and Amazon conduct their business.

There are other problems as well, one being that items purchased from overseas aren't always cheaper, with exchange rates, duties and often-exorbitant shipping costs needing to be factored in. These additional charges often make locally sourced items (when you can find them) far more competitively priced.

Another issue is that legislating to charge taxes on every single item that's produced in another country and imported into New Zealand is problematic at best. The share volume of items being imported and requiring GST to be paid before they're delivered is a logistical nightmare.

First the item arrives in New Zealand where a client code is required for it to be processed. You need to supply Customs with your contact details and verification of your identity in the form of a drivers licence or passport to attain this code. A broker, who provides an invoice that includes a Customs import transaction fee, GST, Brokerage fee, user charges and sometimes a Customs security fee if they decide to take a closer look at the item, then contacts the consumer. The consumer then has to pay those sometimes incorrect fees before the item is released for delivery, a process that can take around three weeks to occur. Suggesting that every single imported item should be subject to this type of system is complete lunacy!

It also seems immoral to charge a Goods and Services Tax on items that are produced in another country. The New Zealand government hasn't provided any infrastructure to help those items to be manufactured. Although I'm sure the clowns in charge will disagree, the only service they can take credit for is when the item is transferred from its arrival place in New Zealand to its destination, the taxing of which is hardly going to save New Zealand from the financial hole National has mismanaged us into.