No changes to GST threshold for now

The Herald reports:

The Government wants to lower the threshold on online purchases which qualify for from mid-2018, but says more work is needed and there will be no change without public consultation.

Currently, online purchases don’t qualify for GST and tariff duty unless the total tax owed is $60 or more – meaning a purchase price of about $400. But goods such as clothes, accessories, and shoes attract both duty and GST, meaning charges may be payable when the purchase price exceeds $225, according to the New Zealand Customs Service.

The $60 duty threshold, referred to as the de minimis, is the point at which more would be spent on the administration and collection than would be collected in revenue.

Customs Minister Nicky Wagner today said she is continuing to look at different ways to collect tax effectively, and the government acknowledges a lower threshold “would help to level the playing field, but there’s no quick or easy solution”.

“Customs needs to look into more detail around what some of the collection mechanism options could look like and what the border transaction fees might be,” Wagner said.

“Once Customs has a better understanding of the best ways to collect tax for low-value imports, we will look to lower the threshold, potentially from the 2018/19 financial year.”

I’m glad the Government is not rushing into this. If they get it wrong they will suffer a massive backlash if almost every item people order over the Internet from overseas is detained at the border.  It isn’t about the cost, but about people being able to get the goods they ordered easily.

There may be room for a modest decrease in the de minimis level if it will bring in more revenue than it costs. But I suspect any decrease would face significant extra costs.

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