Changes to tax for online shopping vetoed over fear of negative reaction
MINISTERS vetoed reducing the GST de minimis level on online goods because they feared it would spark a negative public reaction, the Treasury Minister has said.
The current de minimis threshold means that goods bought online under the value of £240 are exempt from GST on delivery.
However, local retailers have argued for several years that this has created an uneven playing field between online shopping and the high street, as they have to charge an additional five per cent on their products.
Treasury Minister Susie Pinel had said her department were exploring reducing the de minimis level, but did not include any changes in the 2019 Budget proposals.
And during an Economic Affairs Scrutiny Panel hearing this week to discuss the Island’s retail policies, she said that several members of the Council of Ministers opposed a scheme to reduce the de minimis values due to the potential of increasing online shopping bills for Islanders.
She said: ‘Retailers have said they find it difficult to compete on a GST level with the likes of Amazon.
‘The Council of Ministers said they did not want a reduction. If we reduced it by half, Treasury would have received £900,000.
‘They felt that publicly it would have been very difficult to implement.’
She added that from a retailer’s point of view she found the discrepancy ‘unfair’ and said she expected de minimis rates to be wiped out completely across Europe within the next few years.
Assistant Treasury Minister Lindsay Ash admitted that reducing the de minimis rate would be unlikely to have much impact on high street retailers but said that the threshold should be reduced in the interest of maintaining a fair marketplace.
He added one of the reasons against making such a change would be the extra strain it could place on the Customs departments which would be put in charge of collecting the additional tax. He said they would have to employ two extra staff if the £240 limit was halved.
The panel was being chaired by Deputy Kirsten Morel, who was joined by Senator Kristina Moore and Deputies Scott Wickenden and David Johnson.