Retailers say they're disappointed the Government proposal to tax all imported digital services doesn't extend to low-value goods as well.
By the end of the year consumers could be paying 15 percent GST on things like movies, ebooks and videos.
But only if the world's biggest online retailers agree to collect the tax on the Government's behalf.
Today's proposal to try to net an extra $180 million in GST on offshore purchases doesn't yet extend to tangible goods worth less than $400. Instead, it focuses on digital purchases like music and movies, proposing to make suppliers like Amazon register for GST in New Zealand and charge it at the point of sale.
"Requiring foreign suppliers to register for New Zealand GST is an elegant solution that should apply for both goods and services, and we think the Government should be moving to implement a solution across goods and services across the same time," says Greg Harford of Retail New Zealand.
"The Government thinks it's a little bit easier to deal with services first, so there aren't the hold-up-at-the-border issues," says New Zealand Initiative Research head Eric Crampton.
"It is a fairness issue," says Associate Minister of Trade Todd McClay. "It's about putting New Zealand businesses and jobs ahead of retailers overseas."
Retail New Zealand says the top five foreign retailers for New Zealanders are Amazon, ASOS, Book Depository, eBay and AliExpress.
"If the top 15 to 20 international, global websites were registered for GST, that would account for 80 percent of the volume coming into the country," says Mr Harford.
The GST on the remaining 20 percent would then need to be collected by Customs at the border.
"They're being a little bit sensible, recognising small-time retail outfits in US or elsewhere wouldn't be interested in doing that, so they'd probably just stop shipping to New Zealand," says Mr Crampton.
Similar legislation already operates in the EU and has been proposed in both Australia and Japan.
"Nobody's come up with good ways of dealing with this yet," says Mr Crampton. "New Zealand might be innovative in it or we might be engaging in wishful thinking."
A paper on the collection of GST on low-value goods is expected later this year.
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