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Mike's Editorial: The 15 percent disadvantage

Author
Mike Hosking,
Publish Date
Wed, 18 Mar 2015, 10:15AM
(Photo: Newspix/NZ Herald)
(Photo: Newspix/NZ Herald)

Mike's Editorial: The 15 percent disadvantage

Author
Mike Hosking,
Publish Date
Wed, 18 Mar 2015, 10:15AM

So the Government has at last woken up to the rort that is GST-free shopping online.

Retailers have been screaming about this for years. Anything you bring into the country, from an online retailer, by in large doesn't attract GST. Hence the poor old brick and mortar retailer is at a 15 percent disadvantage.

Now the problem here is that no one has ever disagreed with the local retailers' complaint or dilemma. The argument from the Government has always been 'it's too hard to collect'.

You're dealing with hundreds of thousands of comparatively small transactions from people in every far flung part of the planet and it's all just a bit hard to try and work out a way to collect it all up.

Well hasn't the worm turned. Clearly the Government has looked at their own books, worked out that they're losing millions and remember, this is a Government that despite all our economic success is barely balancing the books. So they're seeing revenue they're missing out on and there's nothing like your money being filtered elsewhere to get you exercised enough to do something about it.

So they are...well, they've announced what they're actually doing is looking into how they collect all this GST, and part of that process is dealing with the OECD, which basically means they're looking for a cross-country agreement. The trouble with that is getting 30+ countries to universally agree on anything is nay on a miracle.

Even if you cut that deal, that doesn't mean it covers all online retailers. So it's an uphill battle.

This also came to a head yesterday when NetFlix announced they'd be providing their services GST-free, which they're perfectly entitled to do given they're an offshore company that happens to provide a service you can pick up here.

Spark, who provide LightBox, packed a sad, and justifiably so. But their plight is no worse than all the other small retailers who have been complaining about this for years. Sadly for them, a Government can ignore a small corner shop...and they have, and that shop has been at a constant 15 percent disadvantage for years.

So hopefully when someone the size of Spark starts complaining the noise and influence is loud enough for the Government to get fully committed to this.

It's important they do, because if you believe all the so-called 'experts', online retail is the way of the future.

Currently, it's only six percent of everything we spend. But it's six percent and growing.

And if the pundits are right, every year it's 15 percent of whatever we spend the Government is missing out on, and 15 percent a local retailer has to somehow make up to complete.

This country is built on the concept of the level playing field and until now the brick and mortar operator has had no such scenario addressing their plight is years overdue.

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