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On line shopping to get more expensive?

At the moment you can buy most goods from overseas on-line and won’t have any NZ GST charged if they cost less than $400. [Note: for some items, like clothing, GST applies at less than $400.]

NZ retailers are disadvantaged by this because it encourages on-line shopping from overseas retailers.

There is a push at the moment for the Government to review the threshold and perhaps require credit card companies to collect GST on goods bought directly from overseas.

The Government hasn’t reached a decision but what’s been missing from the debate so far is the distinction between “goods” and “services”.

Physical goods like CD’s, DVD’s or hard copy books have to be imported and could be caught by this. But there’s no suggestion it will extend to digital items like e-books or music and movies which are delivered electronically.

There’s a wider issue here and looking simply at imported “goods” won’t be a complete solution.

Also, asking credit card companies to collect the GST on behalf of the Government when someone buys something from overseas online is unlikely to be a complete solution. There are other ways to pay for items bought over the internet and consumers will respond by using those alternatives, like internet banking or by purchasing “e-dollars” or vouchers).

This is a complex issue and with the likely increases in e-commerce it’s an issue GST/VAT systems around the world need to grapple with.

Iain

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