Retailers and consumers will get a chance to tell the Government whether GST should be levied on more overseas purchases.

Revenue Minister Todd McClay said he would issue a discussion paper on the vexed issue of GST and overseas internet shopping before the end of the year. The discussion paper is likely to be followed by another paper in May that would "focus on solutions", he said.

"Retailers and online shoppers haven't had an opportunity to express their opinions and concerns yet to government so that is what we will be asking them to do."

The Retailers Association has called on the Government to abolish or slash the "de minimus" threshold below which consumers are allowed buy goods from overseas without paying GST, for example when shopping on overseas websites. Depending on whether duty also applies on the goods concerned, purchases worth less than between $240 and $400, including shipping costs, can be imported tax-free.

The association says the threshold is unfair to Kiwi shopkeepers and is probably costing the Government $200 million to $300m a year in lost revenues. But it has acknowledged forcing consumers to pay tax on more internet purchases might not be popular.

Labour Party revenue spokesman David Clark said it heard the concerns of retailers who were struggling. "The lack of action has been striking," he said.

The topic will be touched on by McClay when he sets out the Government's tax work programme for the next 18 months at a speech to the Institute of Chartered Accountants in Auckland this morning. McClay said Inland Revenue's tax-take was increasing thanks to an economic recovery, spurred on by regions such as Taranaki. Unemployment in Dunedin was now "an amazing" 4 per cent, he said.

"It is early days but we are starting to see a general improvement in optimism and tax-take."

That meant he could "draw a line" under recent controversies such as moves to claim fringe benefit tax on items such as employer-provided car parks, laptops and cellphones, and instead focus the tax system on "supporting New Zealand Inc", he said.

The 18-month programme would include an "ambitious programme" to negotiate bilateral tax agreements and information exchanges with smaller economies around the world that had previously been overlooked.

"There are countries, for example in the Middle East, which we traditionally haven't had strong relationships with but where we will want to form relationships because New Zealand companies are telling us they are going to start trading there," McClay said.

BUCKET LIST

McClay warned Inland Revenue's aging First computer system could prevent the Government or opposition parties delivering on any major tax-related policy initiatives that they might like to announce ahead of the next election.



First will be retired over the next several years through Inland Revenue's "business transformation" programme, which the department has suggested may cost between $1 billion and $1.5b. But the computer system was like a "full bucket of water", McClay said.



"You need to take something out before you can put anything back in."



Labour revenue spokesman David Clark said he was concerned the party could be thwarted by First and he believed the Government had not been moving quickly enough to replace it. "First has been tying the Government's hands and it could tie a future government's hands and that is holding New Zealand back."



The project to replace First was now bound up in Inland Revenue's wider business transformation project, which would modernise and simplify the tax system, McClay said.



Inland Revenue deputy commissioner Greg James has said provisional tax, which forces businesses to correctly guess their future income or face penalties, could be axed or simplified. There might be no need in future for individual wage owners to file tax returns, even if they changed jobs or moved through tax bands during the financial year.



Clark said tax simplification was the "number one" concern for many small businesses and other countries, such as Britain, had been making faster progress. "It is befuddling why it has taken the Government so long to come out with a proposal if not some concrete actions."



McClay said he planned to establish a new advisory body from within the information technology industry that could provide him with independent advice on Inland Revenue's transformation project. That would sit alongside other "streams of advice" provided by the likes of the Treasury and Inland Revenue itself. He discussed the idea yesterday with three IT industry bodies.