Whining retailers

Greg Harris at Stuff writes:

With Christmas just around the corner many kiwis will be purchasing online to take advantage of the strong New Zealand dollar and the lack of queues.

The rise in online shopping is putting considerable pressure on retailers’ slim margins. Various retail groups continue to lobby for GST and duty to be payable on all privately imported goods regardless of their value.

Customs imposes duties and collects GST on goods imported into New Zealand. If the GST and duty to be collected by Customs is less than $60 the charges are waived. Generally this means the maximum value of goods that can be imported tax free is $400.

The threshold was introduced as a practical solution to address the cost of collecting small amounts of GST and duty where it was outweighed by the revenue raised.

This is a key point. Customs would lose money if it tried to impose GST and/or duty on smaller purchases. They’d need a huge bureaucracy to cope.

The New Zealand Retailers Association believes that this “tax break” for online shoppers detracts from the retailers’ ability to compete in the market.

When I shop online, I prefer a NZ retailer as the delivery is much faster. I only go to Amazon (for exampe) if it is not on Fishpond.

With the effects of the economic financial crisis lingering, consumers are looking for bargains. Retailer loyalty does not rate highly amongst many consumers. It is not unusual for consumers to physically shop in New Zealand to find the desired item before purchasing online GST free.

I’d be interested to see any hard data on this. It sounds unusual to me. People may look at something in the shops and then buy it online – but that may be from a NZ website.

Regardless, even though it is an issue for some NZ retailers, asking the Government to lose money collecting GST on small purchases is just not a sensible strategy.