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GST losses from online, offshore purchases surpass $200 million

Rob Hosking
Thu, 30 Jan 2014

The reason for growing government concern about lost GST tax revenue due to online, offshore purchases can be seen in recent economic data.

The most recent 12-month period saw an estimated $1.357 billion worth of purchases by New Zealand households of low cost goods online.

If bought within New Zealand, that would have reaped the taxman GST of $203.55 million.

The $1.357 billion is a 13.7% increase on the previous 12 month period: if the rate of increase is maintained, it adds a further $185.9 million in spending, and, if GST were levied, a further $27.8 million to the taxman.

To put this in perspective, the projected surplus for the government in the 2014-15 year is $86 million.

The issue of GST on offshore, online purchases was raised by Finance Minister Bill English at a parliamentary select committee this week, indicating the question is very much on the government’s agenda.

When Labour, fresh from suggesting the government should ban Facebook in order to target possible tax malfeasants, raised the question of that company and others avoiding tax, Mr English said a bigger tax issue is New Zealanders being able to buy goods online, from overseas, and not pay GST.

Local retailers have been pushing on this issue for some time: late last year local clothing retailer Hallenstein Glasson chief executive Graeme Popplewell said the lack of GST on online, offshore retail sales is a “failure of the tax system” and that the revolution in the way people now shop means the government cannot afford to avoid this issue much longer without damaging local firms.

Rob Hosking
Thu, 30 Jan 2014
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GST losses from online, offshore purchases surpass $200 million