The Australian Government has set up an enquiry by their Productivity Commission into online shopping and the impact on retailers.
There’ll be lessons here for New Zealand.
I think it’s difficult to contemplate an end to tactile retail therapy which so many Kiwis seem to enjoy as their weekend leisure activity of choice. However, from the work I do it’s clear e-tailing is becoming an increasingly popular way to shop. Recently I’ve seen more and more overseas businesses establish direct selling channels into New Zealand. Clothing, electronic goods, books and toys seem to be particularly popular. To some extent old-fashioned retail shops are seen as unnecessary intermediaries with consumers chosing to order directly from overseas distributors or sites like Amazon.
The Australian Government has recognised a need to examine the impact of this activity on their retailers. There’s an impact for the Government too in the form of reduced tax collections and this has prompted an accompanying campaign in Australia to ensure GST and customs duty concessions for low value imports are not being abused.
New Zealand has similar concessions which I’ve discussed before. Broadly, goods with a value of up to $400 may be imported duty and GST free. This can mean savings up to around $60 on a $400 purchase.
The outcome of the Australian enquiry will be very interesting. Even more interesting will be how the Government reacts if it concludes action is required. Surely e-tailing is here to stay which means the Government’s options for levelling the playing field (if indeed it’s necessary) may be limited. The most obvious tools in their tool box will be in the tax (read GST) and customs areas.
Barrister, Director and Consultant specialising in tax, family enterprise governance and succession, helping start ups and entrepreneurial enterprises grow safely and international expert on value added tax policy and implementation.