Mixed response to GST reform discussion document

18 Aug 2015

The lowering of the GST threshold on overseas purchases is likely to have a positive impact on small businesses, however it may receive a mixed reception from local operators, says MYOB General Manager SME Solutions James Scollay.

Today, Minister for Revenue Todd McClay released a discussion document on changes to GST which could reduce the threshold on overseas purchases made online.

“These changes will help level the playing field for local SMEs, however data from MYOB’s Business Monitor shows that nearly a third of SMEs may be opposed to this move - even in sectors that are considered most likely to support the change, such as retail and manufacturing,” Mr Scollay says.

“SME owners are also consumers, so while on the one hand their businesses will benefit, on the other it means they will be expecting to pay more for consumer goods.”

The MYOB Business Monitor – a regular nationwide survey of over 1000 SMEs conducted by Colmar Brunton – has painted a complex picture on whether changes to the GST threshold will be supported by SMEs.

“In the September 2014 Business Monitor, held just prior to the General Election, 36 per cent of SME operators surveyed said they would vote against a policy to introduce GST on online purchases from offshore retailers and 25 per cent of the respondents stated they would support the policy,” Mr Scollay says.

Strongest support for the policy was from the manufacturing and wholesale sector, with 42 per cent of respondents in support. However, a full third of manufacturers and wholesalers were opposed to the idea. 40 per cent of business operators in the logistics industry also supported the introduction of GST, while 29 per cent were against.

Notably, operators in the local retail industry, who have to charge GST on competing products in the local market, were split on the policy. 30 per cent of the more than one hundred respondents from the sector supported the introduction of GST on online purchases from overseas, while 29 per cent were opposed.

The strongest opposition to the policy came from the finance and insurance industry (39 per cent against, 16 per cent for) and the construction and trades sector (40 per cent against, 23 per cent for).

“There are clearly a large number of local businesses which benefit from access to goods and materials they buy from overseas, and will see this as adding another cost on their operation.”

“In particular, small local retailers paint an interesting picture. On the one hand they are in direct competition with overseas retailers for the dollar of local consumers. So you would assume that having to charge GST for products that are priced below the exemption level for overseas retailers would be creating a competitive disadvantage. But clearly, an equal number of SMEs in the sector are also benefiting from access to goods bought online from international retailers,” Mr Scollay says.

“However, sectors like manufacturing would obviously prefer that the Government establishes a level playing field for the costs of all goods sold in New Zealand.”

“Ultimately, the Government will also have other considerations, such as the revenue it will derive from the introduction of GST across the board. But it is important to recognise that local businesses are by no means all in favour of the policy.”

Mr Scollay says MYOB is currently polling New Zealand SMEs on this issue, with results due in September/October.

For MYOB product information, research results, business tips, discussions, client service and more visit the MYOB website, or its The Pulse BlogLinkedInTwitterFacebook,Instagram and YouTube.

-ends-

For further comment or other information please contact:

Rebecca Huang, MYOB NZ Public Relations Consultant

P: 09 925 3505 / M: 021 1122 720/ E: rebecca.huang@myob.com

Gerard Blank, The Agency Communications Limited Director

P: 03 341 5841 / M: 0275 243 629 / E: gerard@theagencynz.co.nz

About MYOB

Established in 1991, MYOB is a market-leading provider of business management software solutions in New Zealand and Australia. It makes life easier for approx. 1.2 million businesses across New Zealand and Australia, by simplifying accounting, payroll, tax, practice management, CRM, websites, job costing, inventory, mobile payments and more. MYOB also provides ongoing support via many client service channels including a network of over 40,000 accountants, bookkeepers and other consultants. It is committed to ongoing innovation, particularly in cloud computing solutions, and has spent over $100 million in the past three years on research and development. For more information, visit myob.co.nz.

About the MYOB Business Monitor

The MYOB Business Monitor is a national survey of 1,000+ New Zealand small and medium business owners and managers, from sole traders to mid-sized companies, representing the major industry sectors. It has run since 2009, commissioned to independent market research firm Colmar Brunton. The surveyed reference was first published in September 2014. The Monitor researches business performance and attitudes in areas such as profitability, cash flow, pipeline, technology usage and the government. The weighting of respondents by both geographical location and sector is based on overall market proportions as established by Statistics New Zealand and is drawn from an independent survey group, which includes both MYOB clients and non-clients. The next survey is currently in the field, with results due out in September/October.