New Zealand plans 'Amazon Tax' for people buying online

In this Sept. 19, 2013, photo, the Amazon logo is seen on the new logistics center of online merchant Amazon in Lauwin-Planque, northern France. New Zealand announced plans Tuesday, May 1, 2018 to start taxing people who buy books, shoes and other small items online from abroad in a measure many people are calling the “Amazon Tax.” (AP Photo/Michel Spingler)

WELLINGTON, New Zealand — New Zealand announced plans Tuesday to start taxing people who buy books, shoes and other small items online from abroad in a measure many people are calling the "Amazon Tax."

Revenue Minister Stuart Nash said the government plans to close a loophole that allows people to buy low-cost items from abroad without paying the 15 percent tax imposed on goods sold in New Zealand stores. The new system would levy the same tax and must be approved by lawmakers. It would take effect from October 2019.

How to tax purchases from online companies like Amazon is a question vexing many countries. Australia plans to collect tax on low-cost items later this year while the European Union intends to start collecting such taxes by 2021.

"Small businesses such as bookshops have convincingly argued they are penalized by a system which is badly out of date," Nash said. "It's particularly difficult for very small shops outside the main centers."

The current system allows consumers to buy goods worth up to 400 New Zealand dollars ($280) from international online retailers without having to pay tax. That was based on the idea that it would cost more for New Zealand agencies to collect small amounts of tax than it would generate in revenue.

But online sales have boomed, growing at an annual rate of about 18 percent in the past five years, which retailers say has taken a bite out of their businesses. Under the proposed plan, the onus would fall on companies like Amazon to impose and collect the tax.

New Zealand retailers have welcomed the plans.

Tilly Lloyd, the manager and co-owner of independent bookstore Unity Books Wellington, said customers who added life and vigor to the streets by shopping locally were effectively being penalized.

"It's very symbolic for us, it's a change that our street customers have been needing," she said. "It's an equity issue."

New Zealand began charging a 15 percent tax on purchases of offshore digital services in 2016. Known as the "Netflix Tax," the measure applies to things like music, films and e-books that are bought online and downloaded.

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