Govt acts on taxing web buys
Discussion paper this week could lead to online GST by Christmas
New Zealanders could be paying GST on iTunes and Netflix before Christmas. Prime Minister John Key says a discussion document will be released this week on targeting overseas purchases.
The document will cover two issues — paying goods and services tax for online services, and paying it on imported goods.
The Government is likely to act on the online issue first, and GST could be introduced by the end of the year for online purchases such as pay TV and digital downloads.
The second issue is likely to take longer and officials would not provide any recommendations to the Government until late October.
Mr Key said yesterday that it was possible to move more quickly on taxing online services because several other countries had already implemented it.
He said 12 jurisdictions had a tax system for online buys and it was a “well-trodden path that actually works”.
Asked why Kiwis should pay tax on iTunes songs — which can cost as little as $1.50 — he said the principle should be the same no matter how cheap the product.
“If you go down the road and buy a lolly for 10c, you pay GST on it.”
The discussion paper would include a chapter on paying GST on imported goods, currently required for anything worth more than $400. Mr Key said this issue was more complicated and would take officials longer to work out. The threshold for paying GST on imported goods could fall to as low as $20 or zero, similar to what Australia was considering.
But making the threshold zero would inconvenience many consumers.
The Government wanted to be fair to NZ retailers and maintain GST revenue, while also not badly inconveniencing online shoppers, the PM said.
It was losing out on about $180 million in tax on online buys, and this figure was rising.
Lowering the GST threshold would bring New Zealand in line with the rest of the OECD, with most countries using a much lower level. Canada’s is C$20, Britain’s £15 and in the US imported parcels are taxed.