politburo joyan: Online shopping tax 'near impossible' - Business News

Published: 6:18AM Thursday July 11, 2013 Source: ONE News

Source: Maximum PC

Implementing GST on overseas online shopping purchases would be near impossible to do without adding costs and inconvenience to buyers, Customs Minister Maurice Williamson says.

Inland Revenue and Customs have agreed to set up a joint working party to investigate whether and how GST could be levied on purchases worth less than $400.

The initiative was kicked off partly out of concern from local retailers, who have said they were having to compete with overseas web businesses on an uneven playing field, as well as the huge growth of internet shopping.

Would you still shop online if purchases under $400 were taxed? Have your say below using your Facebook login.

While supporting the investigation, Mr Williamson believed implementing a tax on foreign goods seamlessly was problematic.

"The one thing we do not want to do is add unbelievable compliance costs or disruption and delays for people being able to get their goods.

"If we were to bring it in, we would want to have it seamlessly electronic and just a charge to their account."

Mr Williamson said many other countries had not yet been able to solve the issue of taxing online shopping.

"I know of a lot that are grappling with the problem and saying, 'we don't know how to deal with this'.

"It might be that the world of technology has finally exempted governments and their ability to tax people."

Retailers Association chief executive John Albertson believed with the appropriate legislation, the additional tax could be imposed through the electronic payment process.

"To be able to introduce the collection process through the payment process is reasonably straight forward," he told TV ONE's Breakfast.

Mr Albertson said New Zealand retailers had a very low profitability margin despite the high Kiwi dollar, and believed adding the tax would help provide a level playing field against international markets.

"If you look at the statistics, in terms of the profitability of retail in New Zealand, the net profit sales ratio for retailers across the whole market is 3%.

"If you've got a $1m business, you'll make $30,000. I wouldn't get out of bed for that much."

Intangible goods

The Customs Minister said experts would investigate possible solutions to taxing overseas purchases, and the department would report back to Cabinet if there was a mechanism they believed worked.

"I think it's going to be very hard to even know what people bought overseas, what they paid for it and how they paid for it, and hence how you clip the ticket along the way.

"There is also a lot of intangible goods people buy on the internet as well - they buy music, they buy videos, they buy software, and we don't even get to see those in customs.

"So how do you tax those? Well, you can't."

GST is currently only levied on overseas purchases worth more than $400 because of the cost collection. A lower "de minimus" applies to some goods that still attract duty such as jewellery and clothes.

Shipments with a value higher than the de minimus also attract a flat-rate Import Entry Transaction Fee of $38.07.

That fee will rise to $46.89 at the end of the month when Customs is due to launch the $89 million first tranche of its new computer system, the Joint Border Management System (JBMS).

Source: http://tvnz.co.nz/business-news/online-shopping-tax-near-impossible-5505148

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