The impracticalities of GST on overseas online shopping

Summary:The New Zealand Inland Revenue and the Customs Department have set up a working group to see whether GST should be collected on purchases below the current NZ$400 limit.

After pressure from retailers, the New Zealand government is looking at imposing the Goods and Services Tax (GST) on online purchases made overseas.

The Inland Revenue and the Customs Department have set up a working group to see whether GST should be collected on purchases below the current NZ$400 limit.

This is a long-running issue, one that never seems to go away. But it's obvious that the idea is impractical.

When the matter was last raised a few months back at a conference in Wellington, it was clear that GST on small amounts was a non-starter. The cost of administration was just part of it; another concern was how to tax intangible purchases, like on iTunes.

But the news barely broke before Customs Minister Maurice Williamson saw the silliness of the idea.

Williamson is something of a geek by government standards, qualified in computer science, a honorary fellow of the NZ Computer Society, and a former minister of Communications, so he should know what he's talking about.

He said it is virtually impossible for GST to be imposed, citing how difficult it would be to track online payments, especially in a world of digital money.

The organisation Consumer New Zealand agreed, saying it would be impossible for the banks to tell where a purchase has been made, and that such a GST plan is doomed to fail.

MasterCard explained that it didn't have the "setup" to impose such charges, due to how banks and credit card providers operate. Even if they did, non-bank payment systems like PayPal and POLI could be used to avoid the payments.

Naturally, consumers, who are buying online in ever-greater numbers, are furious at the suggestion. So are the bloggers, who saw pitfalls in any GST imposition plan.

Some people also saw it as yet another tax grab by a greedy government.

One leading libertarian also commented on how the internet is a boon for Kiwis, liberating us from the clutches of Kiwi retailers so that we can grab the world's bargains at the click of a mouse. He said we should celebrate our right to international online shopping, rather than accept a tax on it.

The newspaper and blog comments certainly show overwhelming public opposition to such a GST tax imposition. A pragmatic government, still desperate for coalition partners to guarantee it a majority after next year's election, will see the folly in imposing GST like the retailers want.

The GST tax plan is such a non-starter from just about every angle. The retailers might as well give up on it, and instead see how they can serve the customer better, now that online presents them with extra competition both at home and away.

Topics: New Zealand, Government


Darren Greenwood has been in journalism, not all of it IT, since the days of typewriters and long before the web spun its way around the world.Coming from Yorkshire, he can be blunt, and though having resided in New Zealand, as well as Australia, for quite some time, he insists he is not one of the 'sheeple!'

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