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Booksellers await 'overdue' paper on tax-free offshore purchases

The national lobby for booksellers say minister of revenue Todd McClay is late in delivering a discussion paper on extending the tax on overseas purchases that undercut local retailers meeting their obligations to the Inland Revenue Department.

McClay said last November that he'd release a discussion paper on treatment of overseas online retailers for goods and services tax, but the work was merged into a wider review of the tax system. Currently goods bought overseas attract GST, depending on the product, at above $240 or $400. Last year the Retailers Association called on the government to waive a minimum threshold for the value of goods that can be bought overseas without incurring GST.

"The Minister had every opportunity to announce a plan to put right this anomaly in the current application of GST - the so called universal tax," said Lincoln Gould, chief executive of Booksellers New Zealand. "Not only is it estimated that this is costing the government upwards of $300 million per annum, but it is hurting the economies of small business and thus small communities."

"The minister promised a discussion paper on the issue prior to Christmas last year following the establishment of across ministry working group," Booksellers' Gould said. "He failed to deliver then and now he has missed another opportunity."

(BusinessDesk)

Comments and questions
2

Retailers are dreaming if they thinking whacking GST on all internet purchases will save them. I import stuff quite regularly and have no problem paying GST if they can find a cost effective way to collect it at lower levels. Won't change where I buy stuff as I get a better selection online and even after GST and freight I still save a lot of money. We are in a world of fewer borders and shorter distances that ever before, either change your business model to suit or get out of business. Don't try to force the government to put barriers up to protect you.

I understand their complaint, but aren't they just like all the other businesses whose business model was based on history - the reality is not that people by and large do internet purchasing to avoid GST- I think we do it because we get better service, access to a wider range of stock and choices, and greater certainty. This is not dissimilar to the reduction in numbers of the local petrol station, the corner butcher, grocer, and the newsagent or small bookshop. Their business models are uneconomic in the present day and age. Small bookshops, unless they are run for love, or a specialist clientele are unlikely to survive anyway without diversifying into toys and lotto. Chain bookstores are pretty uneconomic without limiting stock and labour costs to fast moving titles, and inexperienced staff.

The Customs Act has a mechanism for collection of GST - if it is so significant a tax gap, then lets collect it - if the social and fiscal costs of collecting it are truly greater than the benefits, even after all the means of increasing the productivity of the collecting process are pursued then lets not collect it and adapt to the new world.

I am as nostalgic for the local bookstore as the next person, and a significant patron of a local owner-operated bookstore who is swimming against the tide. The reality is that I would rather buy my specialist interest books from Amazon, than pay a premium for them to do so, no matter how much I enjoy shopping there.

I think the Booksellers Association might be really looking for a tariff substitute :)