GST etc on imports

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Geektastic

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#138266 27-Dec-2013 16:59

This is in the press again with the usual discussion.

I received today notice of the following duties payable on a single item of clothing from the USA which cost US$247 inc delivery:

"Revenue Type IMPORT DUTY" "Amount $24.70"
"GST" "$49.61"
"IMPORT TRANSACTION FEE" "$25.44"
"GST ON IMPORT TRANSACT FEE" "$3.82"
"BIOSECURITY LEVY" "$15.33"
"GST ON BIOSECURITY LEVY" "$2.30"

"Total payable for this transaction" "$121.20"

It seems like a huge amount in extra charges for no real reason, as a single item of new clothing represents the same biosecurity risk as a jumper knitted and sent by my Mum on which no duty is payable.

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#958019 27-Dec-2013 17:16

The duty and GST for those products exceeds the $60 threshold which is why you have to pay it.

Once your product is liable for any duty and/or GST you also need to pay the IETF fee (which is essentially what it costs Customs to process the goods) and then it's mandatory to pay the biosecurity fee.

freitasm

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#958025 27-Dec-2013 17:33

The "biosecurity levy" is an interesting item added to clothes.

In the news today the headline was 40% support local retailers in foreign-GST wrangle.

Let's have a look at some of these things:

"Nearly 40 per cent of New Zealanders believe GST should be charged on all purchases made on foreign shopping websites, a survey has shown."

Why? What was the question asked?

"The Government is estimated to miss out on up to $300 million in sales tax each year."

Is this before or after considering the cost of collecting the $300 million in $60 or less instalments? Currently Customs waives the collection of GST under $60 ($400 goods including shipping). How much would it cost to collect GST if using today's procedures, i.e.. parcel lands in New Zealand, Customs officer/broker inspects parcel and calculate GST, parcel is put in storage until paid, then released.

Now let's say the incoming parcel gets stamped with $1.50 GST. Would you collect that, seeing the cost to enforce it? Someone calculated that $60 was the threshold. Anything less than $60 would cost more to collect so it is really dumb doing it.

So those $300 million could be 300,000 times $100 GST, or could be 300,000,000 times $1. You can see where costs will go when this happens.

"Kiwis flocked to the shops yesterday for the annual Boxing Day sales - but many are increasingly buying cheaper online from overseas."

Of course. If I can buy shoes for my daughter on Amazon for about 50% of the retail in New Zealand why would I pay more here? With good planning one can wait for a two week delivery. Even with 15% increase due to GST it's still more affordable to buy some items online from overseas.

"Surprisingly, just under 40 per cent - 38.5% - agreed with the view of the Retailers Association that the 15 per cent GST should be applied to all overseas online purchases to level the playing field for local retailers."

Ah, so this is a lobbying thing. The retailers see that people are buying online and they can't compete in price, so their next good plan is to raise artificial protection barriers. But what's the cost of this? As I said before someone already put the barrier cost at $60 before.

When I posted a comment on Twitter someone replied with "it’s about paying your tax, not local retailers."...

Hmmm, no. It's about retailers. They are the ones pushing it.

I am happy to buy local stuff if the price is price is right. But when the difference goes between 50% - 100% there is no way I will stop buying online, even if GST is applied.

Someone suggested GST should be charged on credit cards when the transaction is completed. I think this would be unfair because not all overseas purchases are for goods sent into the country. Someone could be buyding gifts on Amazon to send to relatives in Australia or UK. GST is not owed on these, surely. This would require system changes in all levels from merchant systems all over the world changed to notify credit card issuers of the shipping address.

"TradeMe spokesman Paul Ford said a change in GST law wouldn't affect it hugely, however it could impact on the small number of members who import goods from overseas to sell on the auction site."

Hmmm. Wrong here. People buying things to sell for profit on Trade Me already have to collect GST when selling locally. They are lucky to not pay GST on imports if they import under the threshold but in this case they are probably on the wrong side of the law already.

"Mr McClay decided to delay release of the discussion document after a recent visit to Europe, where he spoke with the European Commission and a number of other authorities about taxing online sales. Those talks included consideration of wider issues around tax base erosion and profit shifting (BEPS), or in simple terms large international firms funnelling revenue from one country to another to minimise tax."

Ah, here is the main thing. Apple and Google pay next to no taxes in New Zealand and many other countries, due to loopholes. It would cost a lot less to IRD to collect $300 million from a handful of large corporations in one year than trying to collect those $300 million from hundreds of thousands of consumers buying $100 items overseas. Why not go for the big fish? Again, because this is a Retailers Association movement...

"Labour Party revenue spokesman David Clark said the Government "needs to explain to New Zealand businesses why they should be disadvantaged by having GST collected when overseas business don't face that challenge"."

It's easy to some people to understand when even with GST added some items would still be cheaper online. I think adding GST to online overseas purchases could just prevent people buying things. There are some items that are so more expensive here and not essential that retailers wouldn't see much increase in sales.

""It seems it would be pretty simple to speak with Amazon and other suppliers to ask them to collect GST since they collect, as I understand it, sales taxes for individual states in the US. If that's true, then it's obviously an ideological decision from the Government not to collect it.""

I think Mr David Clark is making things appear easier said than done.

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tigercorp

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#958027 27-Dec-2013 17:34

It pays to make use of http://www.whatsmyduty.org.nz/

MikeB4

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#958031 27-Dec-2013 17:39

I see no problem with the biosecurity levy, it costs considerable money to protect our borders. Our economy could very easily wrecked with out the searches etc.

Here is a crazy notion, lets give peace a chance.

nathan

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#958036 27-Dec-2013 17:54

If you'd bought electronics instead of clothing, there's no duty and you would have paid nothing extra FWIW

sbiddle

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#958037 27-Dec-2013 17:58

freitasm: Currently Customs waives the collection of GST under $60 ($400 goods including shipping).

The threshold is $60 which includes duty and GST. In the case with the OP the duty and GST put the value over $60, even if the goods are under the $400 threshold.

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freitasm

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#958039 27-Dec-2013 18:01

sbiddle:
freitasm: Currently Customs waives the collection of GST under $60 ($400 goods including shipping).

The threshold is $60 which includes duty and GST. In the case with the OP the duty and GST put the value over $60, even if the goods are under the $400 threshold.

Correct. I wasn't explaining the OP's situation but creating the base for the wall of text I posted in relation to the article linked.

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Geektastic

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#958059 27-Dec-2013 18:42

sbiddle: The duty and GST for those products exceeds the $60 threshold which is why you have to pay it.

Once your product is liable for any duty and/or GST you also need to pay the IETF fee (which is essentially what it costs Customs to process the goods) and then it's mandatory to pay the biosecurity fee.

I have never yet found any explanation for an apparently random 10% duty on clothes and shoes. Why just them - and why them at all? GST I can understand, but not that.

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#958060 27-Dec-2013 18:47

KiwiNZ: I see no problem with the biosecurity levy, it costs considerable money to protect our borders. Our economy could very easily wrecked with out the searches etc.

But no levy would apply to one thing that could cost only $1 less than something else.

Biosecurity is not dependent on the cost of the items, so a letter with zero monetary value could cause more damage than a $10 million shipment of diamonds if it contained say Foot & Mouth.

I agree it costs money to protect the borders (although being European, we have never bothered as things can make their own way quite easily and even Rabies is now not quarantined for within the EU for pet movement etc) but I think it should be targeted more towards items likely to possibly represent a biosecurity threat (i.e. not clothes or shoes!).

Also, we fund Customs from our taxes. Why are we having to pay them twice to do what we are employing them for?

MikeB4

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#958061 27-Dec-2013 18:47

Many countries have duties on various products for various reason, a common reason is to protect local industries.

Here is a crazy notion, lets give peace a chance.

MikeB4

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#958062 27-Dec-2013 18:48

Geektastic:
KiwiNZ: I see no problem with the biosecurity levy, it costs considerable money to protect our borders. Our economy could very easily wrecked with out the searches etc.

But no levy would apply to one thing that could cost only $1 less than something else.

Biosecurity is not dependent on the cost of the items, so a letter with zero monetary value could cause more damage than a $10 million shipment of diamonds if it contained say Foot & Mouth.

I agree it costs money to protect the borders (although being European, we have never bothered as things can make their own way quite easily and even Rabies is now not quarantined for within the EU for pet movement etc) but I think it should be targeted more towards items likely to possibly represent a biosecurity threat (i.e. not clothes or shoes!).

Shoes are a very high biosecurity risk

Here is a crazy notion, lets give peace a chance.

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Geektastic

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#958063 27-Dec-2013 18:50

KiwiNZ:
Geektastic:
KiwiNZ: I see no problem with the biosecurity levy, it costs considerable money to protect our borders. Our economy could very easily wrecked with out the searches etc.

But no levy would apply to one thing that could cost only $1 less than something else.

Biosecurity is not dependent on the cost of the items, so a letter with zero monetary value could cause more damage than a $10 million shipment of diamonds if it contained say Foot & Mouth.

I agree it costs money to protect the borders (although being European, we have never bothered as things can make their own way quite easily and even Rabies is now not quarantined for within the EU for pet movement etc) but I think it should be targeted more towards items likely to possibly represent a biosecurity threat (i.e. not clothes or shoes!).

Shoes are a very high biosecurity risk

The 10% is charged just because they are shoes - it does not relate to biosecurity.

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#958065 27-Dec-2013 18:53

KiwiNZ: Many countries have duties on various products for various reason, a common reason is to protect local industries.

Agreed, however NZ has no clothing or shoemaking industry worth a 10% across the board charge to protect. Even most NZ designed clothing is made abroad.

sbiddle

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#958083 27-Dec-2013 19:30

Geektastic:

Also, we fund Customs from our taxes. Why are we having to pay them twice to do what we are employing them for?

Many Govt departments operate on a cost recovery basis when they provide services.

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#958085 27-Dec-2013 19:34

Perhaps we could save NZ Post by putting a charge on every email sent that replaces a communication that would otherwise require a stamp.
Personally what drives me to import is availability rather than price.

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