It’s election year, and political parties are jockeying for position in the run up to the General Election on 23 September. We recently published an Election Statement, calling on political parties to commit to a number of steps if they take the Treasury benches in September.
Lower income taxes, greater controls on council rates, fixing the de minimis loophole or a review of GST; and more national consistency on regulation are top of our list.
The retail sector is a huge contributor to the New Zealand economy and deserves to be taken seriously. With an annual turnover of $83 billion, we employ more than 209,000 New Zealanders across 27,000 businesses. However, retail firms and jobs in the sector are under pressure, and the new Government will be in a positon to help support consumer spending, and make it easier for retailers to do business.
Retail NZ is asking political parties to commit to a number of actions, including effecting tax cuts through threshold adjustments and greater controls over local council rates increases to allow consumers to spend more of their own money. Taxes and rates make up a significant proportion of household expenditure, and if Government and councils take less from people’s pockets, consumers will be able to make their own spending
decisions. While some will undoubtedly use tax cuts to help repay debt, it will undoubtedly also have a significant positive impact on the retail sector.
After years of painful inaction, it’s time also for the new Government to commit either to fixing the de minimis loophole that allows foreign firms to sell goods online to New Zealanders without paying GST, or to start seriously considering alternatives. The Government is currently missing out on $235 million in tax revenue due to this loophole, which equates to 1.9 per cent of GST from retail sales. However, we project this will increase to 5.2 per cent by 2027. In the long-term, as the world becomes increasingly globalised, it’s not sustainable to have a tax system that isn’t equally enforced across all players in the market. If the Government is unwilling or unable to follow the Australian lead and deal with this issue, then the time has come for a fundamental review of GST.
It’s also important that the new Government seeks nationally consistent regulation wherever this possible. Many retail businesses operate multiple stores in different council areas, which means not only that they need to understand and comply with up to 67 different sets of red tape, but they need to participate in up to 67 different – but nearly identical – processes every time regulations are enacted or reviewed. This creates huge compliance costs for everyone, including retail businesses, as well as councils and community interestgroups. The reality though, is that we’re a small country and we don’t need so many different processes when most things are pretty similar between districts. For example, if a flag or sandwich board is safe for display on a street in Wellington, then chances are it will also be safe and suitable for display on a street in Gore.
You can see our Election Statement on our website. We’re waiting to hear back from political parties, and we’ll let members know what they have to say about our suggestions. In the meantime, if you’re talking to political candidates, you might want to let them know what you think on these and other points.