Online GST change not ruled out
Labour’s promise not to change personal income tax, GST or company tax rates in a first term would not exclude it introducing an ‘‘Amazon tax’’ that would ensure GST is paid on overseas internet shopping, revenue spokesman Michael Wood says.
That keeps it in the same position as National, which has also not ruled out changing a rule that allows people to purchase most items costing less than $400 from overseas websites without paying GST.
Retail NZ has called on political parties to follow a lead set by Australia, which will become the first country in the world to oblige large foreign firms to collect GST on all sales they make to its residents from July next year.
An Amazon tax would raise $235 million a year if applied in New Zealand, rising to $935m within nine years because of the growth of internet shopping, Retail NZ has forecast.
Labour moved on Thursday to hose down uncertainty about a tax working party it planned to establish, committing not to implement any tax changes that flowed from its recommendations until after the election scheduled for 2020.
The working party is expected to consider a broader capital gains tax on investment property and possibly other investments, but Labour’s commitment means that could not take effect prior to another vote. Already-proposed taxes, such as water and tourism levies, could still go ahead beforehand.
Wood said it would not regard applying GST to overseas internet purchases as ‘‘part of the systemic review’’ that its tax working group would look at.
Instead it was ‘‘a current piece of work that is in the system under the current Government that we would continue with’’, he said. That meant it was not ruling out an Amazon tax in any first term, he confirmed.
‘‘We have flagged it as something that needs a good review and a good look.
‘‘The pressure is building for something to happen in that space. We haven’t got to a firm position but we remain very conscious of the issue.’’
What might be proposed under a National-led government appears just as uncertain.
Customs Minister 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.
But Macindoe has not yet released the report and it now appears likely to remain under wraps until after the September 23 election.
A spokeswoman for Macindoe said Customs’ advice was ‘‘still under consideration’’.
Wood agreed it was probably fair to say no party would view an Amazon tax or reducing the tax-free threshold on imported low-value goods as a vote winner. ‘‘But the reasons for looking at it more closely continue to build.’’
The Government extended GST to digital products and services supplied by foreign firms – such as internet TV, music and e-books – last year. The change has been labelled a ‘‘Netflix tax’’.
But it has warned that extending the same treatment to physical imports would be more complicated.