Amazon entry worries retailers
Shop owners are holding back on hiring staff and on stocking new product lines because of concerns about GST and Amazon’s entry into Australia, Retail NZ says.
The warning came as Harvey Norman boss Gerry Harvey reportedly labelled Amazon ‘‘a parasite’’ in an interview with Australia’s News Corp.
Retail NZ argues its members have to compete on an uneven playing field because consumers can usually buy items costing less than $400 from overseas websites without paying GST.
Its concerns have been heightened by indications that Amazon will open in Australia this year, from where it could ship to Kiwi consumers free of GST.
Amazon’s investment should allow the US giant to cut its delivery times and grab a larger slice of New Zealand retail spending.
Retail NZ public affairs manager Greg Harford saw signs Kiwi retailers were starting to batten down the hatches.
‘‘I heard from a member in Dunedin over the weekend who felt they were not in a position to invest in their business as a result of the fact the Government disadvantages Kiwi firms.’’
The sporting goods retailer was concerned about the medium-term outlook, Harford said.
‘‘It is about bringing stock in and potentially bringing on new staff – question marks about whether that will happen.’’
Rather than just set up a single distribution centre in Sydney or Queensland, Amazon is now expected to open multiple distribution centres close to all Australia’s major cities, in what would be a significant expansion.
‘‘If Amazon is going to be playing a bigger part in the New Zealand retail market then it is right it should be paying its share of tax like Kiwis have to.’’
Citigroup Australia analyst Craig Woolford forecast last year that Amazon could take an A$4 billion annual bite out of the Australian retail market, securing about 14 per cent of all online sales there. He forecast the biggest impact would be on JB Hi-fi and Harvey Norman, which could see sales drop more than 19 per cent.
The Australian government has moved aggressively to close down Gst-free internet shopping.
It will demand foreign companies collect Australia’s 10 per cent sales tax on low-value items they ship to Australians from July, doing away with an A$1000 Gstfree threshold for overseas internet shopping.
Foreign companies that sell less than A$75,000 (NZ$80,000) of goods to Australians each year will be excluded from the obligation.
PWC tax expert Eugen Trombitas said Australia’s plan was ‘‘bold’’. He forecast the New Zealand Government would wait to see how easy it proved to implement and enforce before weighing up its own options.
‘‘I suspect there will be a discussion document shortly after the election but unlikely before.’’
Customs Minister Nicky Wagner said Customs officials were working with the Inland Revenue Department, the Ministry for Primary Industries and Treasury to explore ‘‘a range of alternative, low-cost methods for collecting duty on low-value goods’’, and she expected a report next month.
She would be keeping a close eye on Australia to see how its proposed system was likely to work in practice.