The government has decided that all online shopping should have 15% GST added to it. At the moment, only purchases of $400 or more are charged GST and this is done at the border. Customs adds that charge to your purchase. However, next year, purchases of less than $400 will also have GST added but the seller has to add that to the price. Then the seller has to reimburse the New Zealand Inland Revenue department.
The previous government wanted to do this but thought the cost of collecting the tax from online sellers would be more than the tax collected.
Many New Zealand retailers are pleased about this decision to add GST to online shopping. They say they want a “level playing field” which is fair to local retailers. People who shop locally help to make downtown streets more lively, and they help to pay local wages and rent. New Zealand has 26,000 small businesses which rely on local people for support.
Of course, we all want a bargain and often online products are cheaper than those in New Zealand shops. New Zealand is a small country which doesn’t have the advantage of a large number of buyers. A company like Amazon can offer products at a cheaper price because of the size of their market. Some people are calling this GST on cheaper products, an Amazon tax.
Vocabulary
• border – our border is the airport or port where the product enters New Zealand
• reimburse (v) – give back that money which belongs to New Zealand Inland Revenue
• Inland Revenue Department – IRD, tax department
• retailer – a business which sells products, a person who sells products
• level playing field – this is a well known metaphor which means something which is fair to both sides