More on Amazon flipping the bird at the government

Tom Pullar-Strecker looks further into the Amazon Tax issue: Quote:

The Government’s plan to require foreign firms to collect GST on goods they ship to New Zealanders from October next year ? its so-called “Amazon tax” ? is suddenly in genuine trouble.

Australia is the canary down this particular coalmine, and right now that canary is looking pretty poorly.

If you listened to New Zealand retailers, you might think this was the last country in the world to close down a loophole under which consumers can buy low-value items from overseas without paying sales tax.

It is fair for them to grumble. New Zealand’s $400 tax-free threshold for most goods crossing the border is relatively high by international standards and they have been dealt a bad hand in that regard.

But the solution the New Zealand and Australian governments have come up with to create a level-playing field for local retailers ? requiring foreign firms to collect GST on their behalf at the point of sale ? is untested.

Amazon has decided that rather than go to that trouble, it will instead block Australians from buying products through its main website.

Instead, Australians will only be allowed to shop at Amazon Australia, which for years at least looks set to offer only an inferior range of goods at higher prices.

The move by Amazon came largely out-of-the-blue, and it is only possible to guess at its motivation and end game.?End quote.

Amazon knows how small our market is. While Stuart Nash may think that $200 odd million is a large chunk of coin, for Amazon it is chump change.?Quote:

It may be that Amazon has simply decided it doesn’t have the time, inclination or perhaps the capacity to implement the necessary systems changes to collect GST.

It may have made a late call that it is better off stomaching some loss of Australian sales, compensating for that by driving more custom to its local Australian store.

Or it may have made a more calculated decision to punish Australia for its new tax policy to try to dissuade other governments around the world from being tempted to follow its lead.

Certainly, Amazon’s shock move has come very late in the piece, at a time that seems likely to cause the Australian government maximum consternation.

Australia’s Amazon tax is due to come in from the end of next month, and the Australian government now has no choice but to tough it out, rather than be forced into a humiliating climbdown.

But equally it can’t get off the hook with consumers by claiming Amazon has given it no notice at all of its intentions.?End quote.

Amazon is playing tough, and why shouldn’t they. They operate globally and if every country tried this on then it would become a nightmare for them. This problem is being caused by countries thinking they can control companies domiciled in other countries. The politicians of Australia and New Zealand are finding out the hard way that they can’t.?Quote:

New Zealand has far less clout than Australia when it comes to fighting an international battle with online retailers.

Since Amazon has not yet set up shop in New Zealand, it is more vulnerable to Amazon not playing ball with our Amazon tax, which at this stage remains only a proposal due to take effect from October next year.

The New Zealand Government had arguably won just enough grudging support from the public for the tax change to make it politically palatable. But that was based on an assumption that it would only push up the price of foreign goods by 15 per cent.

Fragile public support for an Amazon tax could quickly disintegrate, if consumers find out it means they cannot shop at all from Amazon, or from other foreign firms that might follow Amazon’s lead.?End quote.

The problem the government has is that we can use the same arguments that Iain Lees-galloway uses on employers with regards to the minimum wage. He says that if employers can’t handle those increases they probably don’t deserve to be in business. Well the same applied to retailers. If they can’t handle a 15% differential in pricing then perhaps they shouldn’t be in business. But it is worse than that, because if the difference in pricing was really only 15% then there really wouldn’t be a problem. But the reality is retailers, middle men and distributors are gouging Kiwi consumers, which is why we buy things online, at discounts far greater than 15%. Then of course there is the range of choice that isn’t available here. The retailers won’t address that though will they??Quote:

Retailers ? who probably thought it was “job done” on an Amazon tax ? would be well-advised to think again about how they can ensure consumers don’t turn totally against the tax change, should it become a harder sell. End quote.

I buy bugger all from New Zealand retailers. Mainly because of their unreasonable prices. They should get with the programme.