Retail NZ says that news that further research will be carried out by the Government on how other countries collect tax and duty on low value imports is pleasing for retailers.

Under current rules, imports worth less than $400 can generally be imported free of GST and duty, with New Zealand retailers arguing  that this creates an uneven playing field where they are unable to compete with foreign websites on price.

According to Retail NZ GM public affairs, Greg Harford, this creates a reverse tariff that is harming Kiwi businesses, costing Kiwi jobs, and depriving New Zealanders of choice in  shopping centres, and the Government of revenue.

“Price is a key driver for shoppers, and the reverse tariff is encouraging people to send their money offshore, rather than support New Zealand’s great retailers,” Harford said.

“Retail NZ and others have been raising this issue with Government for some time, and we are pleased that Minister McClay has asked his officials for some advice on how other countries handle the issue.

“There is a cost involved in collecting taxes at the border,  but for most items, this cost is borne by the importer. In principle, there is no reason why the government could not act immediately to apply the same rules to all goods being brought into the country.

“Additionally, there is some work going on at the OECD that could potentially require companies providing services to New Zealanders to be GST registered, and if adopted, this could be extended to low value goods as well. There is no guarantee about the outcomes of this, or that the findings will adopted by member governments.”

Harford said NZ’s low value threshold is high compared with most other jurisdictions. Canada and the UK collect tax on all goods worth more than CA$20, and £15 respectively, however, Australia’s low value import threshold is much higher, at A$1000.

“Retail in New Zealand is being seriously damaged by the current reverse tariff situation, and this will ultimately hurt New Zealand consumers.  There is an urgent need for change, and we are encouraged that Minister McClay has instructed his officials to provide urgent advice on this issue.”