Post-cabinet press conference: Online purchase GST and TPPA

Post-cabinet press conference: Online purchase GST and TPPA

Applying GST to online purchases was the main focus of the post-cabinet press conference in Wellington this afternoon.

Currently purchasers of online goods only have to pay GST if their order is more than $400.

Prime Minister John Key said he thought New Zealanders should have to pay for online services.

"There are about 12 jurisdictions around the world that do that, including Europe. I completely understand why people want to buy online. I just think it should be even and fair with New Zealand retailers,” he said.

Paying GST in advance would mean there would be no reason for items to be held up at the New Zealand border, he said.

GST would be applied to both goods and services online, but Key said the implementation of the goods tax would take longer as the officials still needed to work through the logistics.

Online shopping and services such as music and television currently cost about $180 million a year in avoided GST, Key said.

The government will release a discussion document tomorrow on how best to target offshore purchases, he said.

The document would be divided into two parts: imported goods, and services.

It would focus predominantly on the services tax however, as registering large overseas companies as New Zealand taxpayers was a relatively easy task, Key said.

The services tax could be in place by the end of the year, he said.

Under the services tax, Netflix and iTunes users would be charged GST, but Key said this could not be called a “new” tax.

“New Zealanders have always paid GST. The only change is that the purchasing is happening online.”

A goods tax would take longer, and officials would not make any recommendations to the government until October, Key said.

Key also discussed the TPPA, denying claims that the deal has been losing momentum recently.

“It’s tantalisingly close but we’re not quite over the line yet,” he said.

Key said he felt confident the deal would transpire.

“Excuse the pun, but we’ve been a key player the whole way through. We’ve got those last few points to get through, but I think on the whole, it’s looking okay.”

Audio here:

Video Here:

Part one:

Part two:

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