He goes on to make some reasonable points about Retail NZ’s role in informing consumers about the benefits of buying locally. That’s all fine; I’m happy with whatever choice consumers want to make about paying more and having all the local service or buying from overseas and potentially having warranty problems.
But I’ll disagree that negative effects on local retailers are that substantial a consideration. Really, we need to be minimising deadweight costs here. The absence of GST on imports means some things get imported that, in an ideal world, would be purchased domestically. This distortion is inefficient relative to a blackboard ideal. But some inefficiencies are best left alone – where the cost of mitigating the failure exceeds the cost of the deadweight loss, it’s best not to mess with it.
I’ve yet to see a mechanism for collecting GST on low value imports that does not induce more distortion in favour of NZ retail than the current system applies against NZ retail. If somebody comes up with one, fine. But just insisting that GST be applied without specifying a mechanism for doing it smacks of protectionism, not playing-field levelling.
Rob Salmond also took issue with my piece, though I’m not convinced he read more than the bits I’d excerpted for Offsetting. The Standard thought Salmond worthy of reposting. I left the comment below there for Salmond.