Ranting about NZ retailers

[Edbear]

Irrespective of this tax merry go round ( and the cost to business )that occurs there are several main points here:

1) Most if not all small businesses in NZ are struggling to maintain or achieve a reasonable operating surplus, because the cost of being in business is very high and you have to constantly jump through hoops. Many retailers are going to the wall and there will be more.

2) If a consumer pays gst as part of his purchase price when he buys goods from a store in NZ then why should he / she not have to always pay clearances and gst when the goods are imported privately? This is one of many reasons NZ businesses are disadvantaged in the current environment of open slather.

3) Its apparent that almost no-one cares that people are losing their jobs hand over fist in part because of this environment .

I'm not sure how that compares with importers in other countries. Do you know if the rules are different?

One of the biggest costs to a business is the wage bill. A lot of people have no idea how much has to be sold to not just cover the wages but make a profit on them which can be reinvested.

I simply couldn't afford to employ another person, I don't even pay myself a wage.

[bogan]

Irrespective of this tax merry go round ( and the cost to business )that occurs there are several main points here:

1) Most if not all small businesses in NZ are struggling to maintain or achieve a reasonable operating surplus, because the cost of being in business is very high and you have to constantly jump through hoops. Many retailers are going to the wall and there will be more.

2) If a consumer pays gst as part of his purchase price when he buys goods from a store in NZ then why should he / she not have to always pay clearances and gst when the goods are imported privately? This is one of many reasons NZ businesses are disadvantaged in the current environment of open slather.

3) Its apparent that almost no-one cares that people are losing their jobs hand over fist in part because of this environment .

1) Is this due mainly to lack of income due to international competition, or running costs (wages would be the big one I guess) of doing business in NZ.

2) I'd like to see this rectified too, but the logistics of doing so are extremely difficult. What I don't want to see if every imported item being subject to the 60 (ish?) dollar inspection duty.

3) The failure to adapt to this environment is what causing job losses. The vast majority of people I know (and certainly myself), would (and do when possible) pay the extra 15% to buy locally, most would even go to 30%. You certainly can't blame it all on GST. How do you feel about the products only available here at double or triple the price? should we buy them and look at it as charity? or should we encourage them to drop the price by buying elsewhere?

[Bassmatt]

3) Its apparent that almost no-one cares that people are losing their jobs hand over fist in part because of this environment .

I think thats a little unfair Robert and disingenious. In my case, and many others I would expect,the it's not a case of shall I buy this in NZ or import it myself, its a matter of I cannot afford to buy it in New Zealand, full stop.
I was never going to pay $600 for a radiator fan, for example, and I imagine the $600 seat cowl that has been mentioned would be in the same boat. In these type of cases NZ business it not missing out because the money was not going to be spent regardless.
Had I not been able to source a cheap second hand fan from overseas my bike would have been parked up until I could have sorted something cheaper out locally.
That may have taken 6 months or longer, so thats tyres, chains, oil, chain lube, etc etc that isn't being bought or worn out in that time period.
In fact I would almost argue that its been a good thing for the motorcycle industry here that I found a reasonably priced replacement because otherwise they would have seen $0 from me in the interim.
It's not as black and white as you portray and personally I am desperately concerned with the state of the economy, for my fellow NZers as well as myself.

[Ocean1]

1) Is this due mainly to lack of income due to international competition, or running costs (wages would be the big one I guess) of doing business in NZ.?

I'd love to see an impartial, professional anaysis of cost of business here vs Au, US. Certainly there's economies of scale driving end-user prices but that doesn't explain all of the difference. If Robert's anything like me he probably gets particularly annoyed about compliance costs. Like the latest IRD ruling that employee out of town accomodation costs are to be taxed as PAYE. Bizzare.

3) The failure to adapt to this environment is what causing job losses. The vast majority of people I know (and certainly myself), would (and do when possible) pay the extra 15% to buy locally, most would even go to 30%. You certainly can't blame it all on GST. How do you feel about the products only available here at double or triple the price? should we buy them and look at it as charity? or should we encourage them to drop the price by buying elsewhere?

Gotta agree. In fact my trigger point is closer to 200%, if delivery is intercity courier times. Even at that I find myself resorting to off-shore suppliers fairly often.

[PeeJay]

No I don't mate, I imported bikes into NZ for some years, and now into Austria and Germany. i have a good understanding.
GST is not recoverable on imported vehicles.

Well SS90 if you werent registered for GST you wouldnt be able to claim it back.
Maybe this was your situation?
But certainly if your business is gst registered you can claim.

Otherwise you were horribly mixing up the roles of Customs and the IRD with regard to the administration of GST

[PeeJay]

The short answer is yes, but as always it is not so simple. If he imports a car, he pays GST on the value of the car and on the fees that attract NZ GST, as GST is a NZ tax. This amount is claimable as it is with me importing the batteries. They are goods and subject to GST and that amount is entered into your GST return as GST already paid, therefore counts against any GST due. Same with my fees, I get charged GST so it is claimable.

However, with vehicles there are a range of charges and fees that the Accountant will go through and claim what is claimable.

Basically it seems that if NZ charges GST, that payment is claimable. Sometimes it is not so clear, hence the need for an accountant.

There are numerous tax deductible charges that are zero rated for gst purposes so no actual gst refund.
But any charge that attracts gst, gst portion can be claimed.
Whether you are importing batteries or cars or shocks, the principles are the same.
cheers

[FastFred]

GST is administered by IRD not customs Customs charge you gst on your import, IRD refund it.

you are a liar, because if you did indeed have a business that imported, you would have a clue what you are talking about. Peejay, if you want to be taken seriously, don't make shit up. You clearly have no idea.

Its certainly not Peejay who has been making shit up.

The short answer is yes, If he imports a car, he pays GST on the value of the car and on the fees that attract NZ GST, as GST is a NZ tax. This amount is claimable

Just like you wanted SS, Edbear asked his friend in the industry and he has confirmed that you are wrong, and reports that for some one involved in importing and selling motor vehicles the GST collected by Customs on their imports is recoverable.

I imported bikes into NZ for some years, GST is not recoverable on imported vehicles.

SS you make a big song and dance about your industry knowledge and experience but totaly wrong about an important thing like GST and you became abusive when challenged. Now you can jump up and down and wave a pitch fork all you like but loud mouth, bull shitting internet bullies don't frighten me.

SS you were happy to abuse others so I am calling you on it.

SS90 You were wrong about GST in a way you shouldn't have been given your claimed industry background.

So I guess your just another meaningless net troll who is either really stupid or your pants are on fire, liar liar.

[Robert Taylor]

I think thats a little unfair Robert and disingenious. In my case, and many others I would expect,the it's not a case of shall I buy this in NZ or import it myself, its a matter of I cannot afford to buy it in New Zealand, full stop.
I was never going to pay $600 for a radiator fan, for example, and I imagine the $600 seat cowl that has been mentioned would be in the same boat. In these type of cases NZ business it not missing out because the money was not going to be spent regardless.
Had I not been able to source a cheap second hand fan from overseas my bike would have been parked up until I could have sorted something cheaper out locally.
That may have taken 6 months or longer, so thats tyres, chains, oil, chain lube, etc etc that isn't being bought or worn out in that time period.
In fact I would almost argue that its been a good thing for the motorcycle industry here that I found a reasonably priced replacement because otherwise they would have seen $0 from me in the interim.
It's not as black and white as you portray and personally I am desperately concerned with the state of the economy, for my fellow NZers as well as myself.

If you scroll through my previous posts you will see that I am not in any way attempting to justify price disparities that are clearly huge. Thats another sub-subject. I was focusing on the inconsistency of tax collection and how it disadvantages businesses.

[Robert Taylor]

Its certainly not Peejay who has been making shit up.



Just like you wanted SS, Edbear asked his friend in the industry and he has confirmed that you are wrong, and reports that for some one involved in importing and selling motor vehicles the GST collected by Customs on their imports is recoverable.



SS you make a big song and dance about your industry knowledge and experience but totaly wrong about an important thing like GST and you became abusive when challenged. Now you can jump up and down and wave a pitch fork all you like but loud mouth, bull shitting internet bullies don't frighten me.

SS you were happy to abuse others so I am calling you on it.

SS90 You were wrong about GST in a way you shouldn't have been given your claimed industry background.

So I guess your just another meaningless net troll who is either really stupid or your pants are on fire, liar liar.

Edbear confirmed how complicated it all is, you confirmed how easy it is to act like a child.

[Robert Taylor]

There are numerous tax deductible charges that are zero rated for gst purposes so no actual gst refund.
But any charge that attracts gst, gst portion can be claimed.
Whether you are importing batteries or cars or shocks, the principles are the same.
cheers

And there are considerable costs that businesses accrue paying accountancy firms to wade through this minefield. Another cost of many that has to be passed on.

[Robert Taylor]

I'm not sure how that compares with importers in other countries. Do you know if the rules are different?

One of the biggest costs to a business is the wage bill. A lot of people have no idea how much has to be sold to not just cover the wages but make a profit on them which can be reinvested.

I simply couldn't afford to employ another person, I don't even pay myself a wage.

Many Australian companies are also hurting and their exchange rate against North Mexico dollars is even less favourable.

[Bassmatt]

If you scroll through my previous posts you will see that I am not in any way attempting to justify price disparities that are clearly huge

Thats another sub-subject. I was focusing on the inconsistency of tax collection and how it disadvantages businesses.

99% of people buying offshore are doing so because of these huge price disparities.

15% GST on imports under $400 isnt going to save the industry or the economy. Businesses get plenty of tax advantages over individuals and rort the shit out of them too (not suggesting you do, of course)

[Edbear]

And there are considerable costs that businesses accrue paying accountancy firms to wade through this minefield. Another cost of many that has to be passed on.

Many Australian companies are also hurting and their exchange rate against North Mexico dollars is even less favourable.

This is what a lot maybe don't think about. You pay x-dollars for a product and sell it for x+ dollars to make a profit. Out of that profit margin, come all costs associated with stocking and selling it. In a competitive environment, (and we are now competing against overseas companies in an international market place), you can't set that margin too high, or you won't sell so you have to very carefully consider your costs.

Average wage is say, $35k, so if you have two staff you have to make enough to cover $70k, so if you imported $1m of stock and your margin was 25%, selling it for $1.25m, and if you could sell all of it in the year, out of that $250k, comes all costs. Doesn't take a rocket scientist to work out how tight it is.

My old accountant back in the '90's said if I wasn't making a GP of 33% I wasn't viable and that was for a one-man business with minimal overheads. So taking my purchse price exclusive of GST and doubling it to make a retail price Inclusive of GST, gave me about that margin. Eg: $100 cost exclusive, to $200 retail inclusive.

Last year I actually bought $20k more stock than I sold and last period I bought $6km more than I sold, then added the expenses to that leading to a major loss for the year and for last period. The annual loss is carried forward to offset against this year, should I make a profit, but I got a refund of GST for last period of $4k which went straight back into stock. Bear in mind I am as yet considered a small business with no employees so multiply everything many fold for a large business with several staff.

Australia is worse off than NZ and even their mineral wealth is failing them now. Talk to most German business men and they will tell you we have it sweet here!

[HenryDorsetCase]

99% of people buying offshore are doing so because of these huge price disparities.

15% GST on imports under $400 isnt going to save the industry or the economy. Businesses get plenty of tax advantages over individuals and rort the shit out of them too (not suggesting you do, of course)

Ive said it before but I think it worth repeating: It does not appear to me there is any will to lower the threshold, because for the Gubblemunt it is a straight cost-benefit analysis: How much will it COST to lower the threshold, vs how much will they BENEFIT, i.e. how much extra revenue will they receive. I am firmly of the opinion that Treasury will have crunched those numbers, if not recently, at least when GST was increased: because if ever there was a time to to do it, that was it. I think we can infer therefore that there is no will to do it, at present anyway.

The only way that might change is if the retailers are successful in their campaigns: but given they were not successful in banning parallel importing, I suggest it is unlikely. Maybe if it becomes an election issue next time round?

[Edbear]

99% of people buying offshore are doing so because of these huge price disparities.

15% GST on imports under $400 isnt going to save the industry or the economy. Businesses get plenty of tax advantages over individuals and rort the shit out of them too (not suggesting you do, of course)

Therein lies the problem, or issue. I tried to keep the retail price within reason of the US MSRP, so took the MSRP and added freight and GST to give me a base for structuring the business. I also tried to give my dealers a decent margin and gave them somewhat more than they would get from other battery suppliers as the technology was new and untested here, so encouraging them to actively market Shorai, making my margin to them as low as I could go and lower than my accountant thought was ideal. I cannot offer my dealers any better price without going out of business.

Bear in mind that my prices are artificially low and not reflective of the usual situation where the business has a lot more infrastructure to pay for which would require the batteries to be about double the current RRP.