Money   travel hero
10 July 2013

Don't shut the door on online shopping

If ever a tax looked difficult to collect, a GST on items bought from overseas online sites would head the queue.

If ever a tax looked difficult to collect, a GST on items bought from overseas online sites would head the queue. But that's what a working group of IRD and Customs officials has been tasked with trying to achieve. Online retailing has opened up a world of shopping to people who want more variety and better prices. NZ retailers, not unnaturally, don't like that. And you have to have sympathy with the fact that they invest in their shops, hire staff, carry stock and significantly contribute to the economy.

But we live in a global world. People have worked out that they don't have to pay more than double the price for a book, a pair of shoes, glasses and heaps more besides, simply because they live in New Zealand. There was a telling comment in my morning's newspaper from a couple who used to live in the United States. "We used to live in the States and we know what these things really cost." And that's the nub of it. Retailers have been able to charge very high prices simply because they could. Now they can't.

One leading suggestion for this tax collection is requiring banks to take it when people transact using their credit cards. Banks won't be all that happy about that, credit card companies most certainly won't be happy about that. Importantly banks won't do it for free. So unless the government subsidises the cost of the collection, which is unlikely, then you can expect to pay another 2 or 3 percent more than the 15 percent being proposed. That also does not take account of Paypal type options or new technologies and ideas that are emerging daily.

Apparently it's difficult for a bank to know whether a purchase was made from sitting at home on your PC or tablet, or whether it was made in a bricks and mortar store on Fifth Avenue New York. So there's another hurdle.

And people have wised up to the myriad ways large companies try to stop them viewing overseas content or listening to music. They will do the same with this tax.

GST is already charged on items valued over $400 bought from overseas. That's where it should stay.

About the author:

Sue Chetwin has been our Chief Executive since April 2007 after more than 25 years in print journalism. She was formerly the Editor of Sunday News, Sunday Star Times and the Herald on Sunday. She says there are strong parallels between consumer advocacy and journalism.

Sue oversees all of Consumer’s operations and is also the public face of the organisation. Sue is a director of the Banking Ombudsman Scheme, an alternate on the Electricity and Gas Complaints Commission and a member of the Electricity Authority Retail Advisory group.

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