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GST on all imports inevitable?

As the volume and value of direct personal imports continues to rise, buoyed by the internet, a strong Kiwi dollar and an amazing range of products on offer, it is becoming increasingly apparent that it's only a matter of time before the present GST threshold on such consignments is reduced - or even eliminated.

Across the ditch in Australia, the NSW Treasurer is making noises about dropping that country's tax-free import figure from A$1,000 to a mere A$30.

This move, he says, is to address the rising issue of GST revenue being lost on the ever-increasing wave of personal direct imports.

So how long before we see the same kind of move here?

NZ's retailers are already moaning and groaning at the effect these personal imports are having on their own sales-figures and margins -- and perhaps not without justification.

When you consider that all personal imports with a landed value (including shipping) of under NZ$330 escape the imposition of GST, it becomes much harder for local sellers to compete -- especially when you consider they have the added burden of honouring warranties and providing support.

Given the number of personal imports that arrive with a bogus declaration value, as is the norm with almost everything shipped from China, the country really is losing a heap of tax revenues to this issue.

Despite the fact that the Customs service has decided it's not economic to collect GST on such imports when the value of that GST is less than $50, maybe that's not really the case at all.

Perhaps a "handling fee", equal to the true cost of processing the transaction could be a fixed component and the GST due added on top of that.

In effect, they're doing that now by using a bogus MAF fee on all GST-liable imports. I say "bogus" because it seems to imply that only more expensive imports could pose a threat to our biosecurity -- yeah, right!

So perhaps NZ Customs ought to be a little more honest and open about this.

Whack a $30 "processing fee" on all personal imports and then levy the GST on the true value of the contents rather than perhaps the falsely declared value.

Every time I buy something from China I'm offered the chance to choose the price I wish to have the declaration value set at. As a matter of principle, I always select the actual value -- to do otherwise would be tax fraud. However, I know that some companies don't offer this option and I get quite cross when I see a $200 gizmo arrive in a box with a declared value of "$10 toy parts".

Elsewhere in the world, Customs officers are able to query the value of such declarations and do some online shopping of their own to verify the true value -- or ask for proof of payment from the importer so that the actual amount paid can be confirmed.

Or perhaps there could be a simple, single $10 fee placed on all personal imports that fall below the present threshold. This fee would be payable online prior to delivery or at your local PostShop when picking up the item.

Right now, many readers are probably thinking that I'm just plain crazy for suggesting ways that the government can take even more of our hard-earned cash - but think about it for a moment.

The retail sector in NZ employs a large number of people. It pays taxes, delivers support and service -- and in many cases is an important part of our social fabric. If we don't create a level playing field then they will find it hard to compete and we'll be left with less choice rather than more. We'll find ourselves drowning in cheap, poor-quality Chinese tat that has no warranty, no support and no longevity.

At least when we buy this kind of thing from The Warehouse, we get a money-back guarantee and the protection of NZ's consumer laws.

GST at the border isn't a form of protectionism or a tariff -- it's simply the payment of a tax that is legitimately due. Ought we be allowed to dodge that tax?

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