Retail Sales need a Boost from Removal of Unfair Tourist Tax

Retail Sales need a Boost from Removal of Unfair Tourist Tax

The government should remove GST on the goods overseas visitors take out of the country according to the Wellington Employers’ Chamber of Commerce. Such a move would be consistent with good tax policy and provide a much needed to boost to retail sales.

“Statistics released today show that New Zealand consumers are keeping their wallets shut. There is a possibility that this spending constraint will persist as fall-out from the global financial crisis continues. Now is the time for a rethink on a government policy which has discouraged tourists from spending money in New Zealand,” said John Milford, Chair of the Chamber’s Retail and Hospitality Committee and Managing Director of Kirkcaldie and Stains.

“Currently it is possible for registered retailers to sell goods duty free if the goods are put in a sealed bag and delivered to the airport, but the scheme is unpopular due to the compliance costs involved. A GST refund at the airport for goods removed from New Zealand is our preferred solution.

“Such a tourist refund scheme would be consistent with the zero-rating of exports which occurs now. Government officials have always acknowledged this but say that the administration and fiscal costs of such a scheme outweigh the benefits. We think the time is right for a rethink.

“Around 184,000 people are employed in the retail sector - down from 195,500 this time five years ago.

“Overseas visitors are not spending as much in New Zealand as they otherwise would. A GST refund scheme would increase sales as it did in Australia when it was introduced there.

“New Zealand is one of the few countries in the world which does not provide a tourist refund scheme. Tourist retail sales are the only export activity where GST is applied. Such a scheme would not be a subsidy it would simply represent the removal of a government-imposed impediment on New Zealand’s largest export sector.

“It will be too late to implement over the Christmas period and summer tourist season but with 85,000 visitors expected for the Rugby World Cup next year, the government has a golden opportunity to maximise the economic impact of the tournament.

“The New Zealand economy needs the extra spending from tourists that is not occurring in the absence of a GST refund scheme. Retail and tourist groups have been pushing for a change for several years but the government is reluctant to forego the tax revenue.

“We say it is retail activity not tax that is more economically useful in generating profits, investment and jobs,” Mr Milford concluded.

ENDS

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