Tax moves on internet shopping loom

An ‘‘Amazon tax’’ on overseas internet shopping that could raise $235 million in its first year is more likely following the change of government, Retail NZ spokesman Greg Harford believes.

However, an accounting body has warned against too much of a shake-up to the tax system. Inland Revenue has previously cautioned that changes could be difficult to implement until it completes its $1.7 billion Business Transformation project in 2021.

Retail NZ has been lobbying for New Zealand to join Australia in forcing overseas e-commerce companies such as Amazon to charge GST on all sales they make to Kiwis from July. Currently, most purchases costing less than $400 are tax-free.

Harford said he believed a change was more likely, sooner, following NZ First’s decision to partner with Labour.

‘‘National had a long time to deal with this issue and didn’t take any concrete action,’’ he said.

‘‘We are reasonably hopeful the new government will look at it seriously.’’

Labour promised not to change personal income tax, GST or company tax rates in its first term.

But Labour revenue spokesman Michael Wood clarified nine days before the September 23 election that the commitment would not exclude it ensuring GST was paid on all overseas internet shopping.

Retail NZ has forecast the amount of money an Amazon tax would raise annually would grow to $935m within 10 years, in line with the expected growth in internet shopping.

National’s customs spokesman, Tim Macindoe, received a report from Customs in June that is believed to have canvassed options such as reducing and simplifying the GST and duty-free threshold on physical purchases.

That could be an alternative to the Australian approach of abolishing the thresholds altogether from July.

But Macindoe kept the contents of the report under wraps.

Chartered Accountants Australia and New Zealand said the pre-election period had seen a proliferation of proposals for taxes on capital gains, land, transport, water, beds and tourists.

Tax leader John Cuthbertson warned against ‘‘ad hoc’’ changes and ‘‘quasi taxes’’ such as user charges, levies and royalties.

‘‘All proposals should be tested against the principles of good tax policy design,’’ he said.

The accounting body appeared to warn that the rich could leave if taxes on them were increased.

‘‘The emigration of even 10 per cent of the highest-earning group would have a material effect on total income tax collected. This risk is something that cannot be taken lightly given the increased mobility of highly-skilled and paid people,’’ Cuthbertson said.

Harford expected retailers would have mixed views about the change of government overall.

‘‘We asked our members what they thought of the previous government towards the end and they told us it was a ‘C+’ at best.’’