New Zealand is currently seriously disadvantaged by a loophole that means that people do not pay GST or duty on low-value purchases (generally goods less than $400 in value) when they buy from foreign websites. This creates a reverse tariff which unfairly discriminates against Kiwi retailers. Booksellers NZ are working hard alongside Retail NZ to level the playing field for local retailers including our membership bookstores.
Booksellers NZ firmly believes it is the responsibility of parliament to ensure GST is a universal tax by requiring all retailers – whether they operate online, in bricks-and-mortar stores, or a combination of both – to fulfil their obligation to collect sales tax.
This is neither a new tax nor special treatment for independent bookstores – it is an equitable and consistent enforcement of existing GST laws.
Locally owned businesses have far greater positive economic impact on their communities and are largely responsible for our communities retaining their unique characteristics. The Here’s what you just did flier lists 10 ways that your customers contribute to the infrastructure of their community by shopping locally. The current de minimis threshold enables offshore online retailers a 15 percent competitive edge over local businesses and contributes nothing to the sustainability of the New Zealand economy.
The Government is missing out on at least $200 million a year in revenue from low value goods, not counting GST that would otherwise be paid on cross-border services and digital downloads delivered into New Zealand. That's a huge amount of tax money!
What is GST Fairness? (Also called eFairness)
E-Fairness, or sales tax fairness, calls for the equitable enforcement of GST as a universal tax. Currently, bricks-and-mortar retailers are required to collect and remit sales tax on customer purchases, while offshore online retailers are allowed to sell customers the same products with no responsibility to collect GST if it falls below the existing de minimis threshold. This places local retailers at a severe disadvantage and has prompted Booksellers NZ to act on behalf of our members.
Booksellers NZ and Retail NZ #eFairnessNZ campaign
In April 2015 Retail NZ and Booksellers NZ are launching a #eFairnessNZ campaign to encourage the government to take urgent action to close the existing de minimis loophole – and we need your help.
What can booksellers do?
Write to your local MP and let them know that you support eFairness in New Zealand: tell them how the existing GST loop hole is impairing the progress of your store and the financial and cultural well-being of your local community. We have also supplied a helpful list matching local bookstores to their local MP's. (Please note this list is as accurate and up to date as possible but may contain some errors.)
Booksellers NZ have provided the eFairness Action Kit to make this outreach easier.
Require overseas companies to register for GST, and collect the tax just like any other retailer does.
Introduce a lower threshold for low value goods or abolish the threshold - where GST and duty has not been pre-paid, this should be collected at the border before the items are released.
Levy a fee on goods worth more than $25 to cover the cost of Customs and quarantine clearance, as happens in most other countries.
Key things to know
New Zealand is out of step with most other countries.
Canada has a CAD 20 threshold and the UK has a GBP 15 threshold. Tax is collected on all imports over these levels, as well as a fee to cover the costs of Customs clearance.
The Government is missing out on huge amounts of revenue as a result of the current loophole – enough to fund at least 4,345 new first-year primary teachers or more than 9,000 hip replacements.
The current loophole makes it hard for Kiwi retailers to compete with foreign websites that don't contribute to New Zealand.
The Government is looking at this issue through the OECD but most countries already charge tax on low value items crossing the border. The Government can and should take urgent action to close the loophole.
How can you help?
Please write urgently to your local MP. Please let them know how this issue is impacting your business and your community and what it would mean for your business and employees if the loophole was fixed. Booksellers NZ have provided an MP letter template on our website. Adjust this template to suit your store and your local MP.
Please use social media to tell the world about the impacts on your business. Use the #eFairnessNZ hashtag to tell your story.
Please tell your customers about how important it is to allow New Zealand stores to survive in a competitive world.
Check out the media links, template letters, submissions and other handy tools that Retail NZ have provided on their website to help engage your customers and communities in the debate: www.retail.kiwi/eFairnessNZ
Find Your Local MP: We have created a document that lists local and MPs and their addresses and matches them to the relevant membership bookstores. Please note this list is as accurate and up to date as possible but could contain some errors.
The Australian Government has today introduced legislation to the House of Representatives that will require foreign retailers and online marketplaces to register for Australian GST, and Retail NZ says it’s time NZ’s National-led
With Australia moving to collect tax on low value goods beginning July 1 next year, Kiwi retailers are facing the likelihood of being hit both ways across the border on the sale of low value goods, according to Retail NZ.
New legislation requiring international firms to charge GST when selling digital services to New Zealanders comes into force tomorrow. Retail NZ and Booksellers NZ say that, while this is good news for big tech firms like Spark and Sky TV, the Government is missing the opportunity to level the playing field for retailers and rake in extra revenue from low value goods.
There is nothing for small businesses and their communities in the Bill being introduced which requires foreign online retailers to collect GST on digital and intangible services according to Booksellers NZ CEO, Lincoln Gould.
“Minister McClay talks of fairness and creating a level playing field. The Bill goes only halfway to rectifying the GST problem with foreign retailers and benefits only big businesses engaged in selling videos, music and e-books,” says Gould.
Federal Government and State Treasurers expect to eliminate GST Low Value Threshold on offshore retail purchases
On Friday morning State Treasurers will be meeting with Federal Treasurer Joe Hockey to discuss reform to the GST. It is being widely reported that the Federal Government and State Treasurers will agree to eliminate the Low Value Threshold on online offshore purchases – bringing tax fairness to the collection of GST.
Retail NZ has cautiously welcomed the release of a Government discussion paper that proposes foreign websites selling digital services to New Zealanders pay GST – but has urged faster action on dealing with low value goods as well.
Retail NZ says retailers will be disappointed that the Government has failed to take action to close a loophole which disadvantages small and large Kiwi businesses because foreign websites don’t have to pay their fair share of GST and duty when selling low value goods to New Zealand.
“The Budget is deeply disappointing for retailers,” Retail NZ’s General Manager Public Affairs Greg Harford said today.