I'm a little bit old fashioned when it comes to buying stuff. I like going into book shops and flicking through the pages of a book before deciding to buy.

I like trying on a pair of shoes and think it's a little bit dishonest to then leave the shop to buy the same pair online. I like the after-sales service that should come with buying from a reputable local retailer. And I'm always a little bit nervous about using the credit card for online purchases.

Despite my old fashioned views, the online economy is huge and getting bigger. The world is your marketplace. Sometimes the only place to find what you're looking for is online. That's making business tough for local retailers, who have to compete with virtual businesses that operate with lower overheads.

Another factor that's been getting increasing press coverage lately is the GST advantage. It's not a new issue, as it attracted some media coverage when the GST rate was increased to 15 per cent in October 2010. That affected the threshold for the low-value imports exemption.

New Zealand has a relatively straightforward GST system that is highly respected around the world by tax designers. That's because there are relatively few exceptions. Put simply, GST is a value-added tax supposed to be charged on all goods and services "consumed" in New Zealand.

As a general rule, overseas suppliers don't have to register for, charge, or account for GST on goods they sell in New Zealand. There's a complicated series of rules for non-resident suppliers but the gist is that there's no GST unless they are in New Zealand.

To keep a level playing field, Customs charges GST when goods land in New Zealand. Private buyers making personal purchases can't claim the GST back, so the final cost to them is increased - just as when buying from a local store.

However, because of the compliance costs of charging and collecting GST on huge volumes of low value goods, there's no GST on imported goods unless the total cost, including duties, is more than $400.

So it's the books from Amazon and the glowing periodic table soap from www.ohthethingsyoucanbuy.com that get through Customs GST free. Retail New Zealand estimates the revenue lost to the Government as being in the range of $200 million to $300m a year.

Add to that the digital goods and services that can be bought online, which don't even make an appearance at the border. A recent example is the battle between Netflix (based in the United States) and Lightbox (owned by Spark) and Neon (owned by Sky TV).

Netflix is non-resident, so won't be charging GST on its streaming TV services. Lightbox and Neon are New Zealand based, so must charge GST. To the end customer, that's a 15 per cent difference in pricing. Understandably, the New Zealand based retailers aren't happy as it's difficult to compete.

The retailers' lament about the GST anomaly is understandable. But there are some practicalities that need to be considered. The reason there is an exemption for low-value imported goods is because the cost of applying a tax on all imports outweighs the benefits. A significant proportion of the parcels entering the country are of low value.

Other suggested methods of collection, such as having credit card companies or the foreign supplier charge and collect tax on the New Zealand government's behalf, have significant hurdles to overcome to have any realistic chance of working. For example, assuming the credit card companies are willing to participate, some mechanism would be required for determining which purchases are for goods to be consumed in New Zealand.

New Zealand's GST system is not perfect. But its beauty lies in its (relative) simplicity. The more that is tinkered with, the less efficient the tax system becomes.