Implementing a GST on online goods and services will help create a level playing field for New Zealand retailers, the Government says.
A discussion document released into the proposal was released by Revenue Minister Todd McClay today.
Mr McClay says New Zealanders are increasingly buying goods and services from overseas and those should be taxed under New Zealand law.
"We believe it is a fairness issue. This is about putting New Zealand businesses and jobs ahead of retailers overseas," he says.
The document will also look to consider the best ways of collecting it.
The proposal was taken to Cabinet yesterday and Mr McClay says the focus would be to not push compliance costs onto consumers.
"There's also a cost consideration here as well. We don't want it to cost more to collect the GST than the amount of GST we can collect."
It is estimated the amount of GST foregone on online purchases is around $180 million a year, with growth of around 10 percent expected each year.
"That is revenue that would otherwise be available to the Government to help fund essential services like healthcare, education and safer communities in New Zealand," Mr McClay says.
The document is mostly concerned with online services such as streaming services Netflix, but also includes the fact GST isn't charged on low-value imported goods, currently set at $400 in New Zealand.
Customs is reviewing how the collection of GST on imported goods can be collected better and is set to report back to Ministers in October.
The proposal is similar to that put in place in Europe in 2003 and recently announced in Australia which will come into force on July 1, 2017.
Public consultation is now open on the proposal.