The subsidy that should never have existed
From April 1, New Zealand Customs replaced its flat cargo-report fee with a per-consignment levy of $2.21 on air freight and $2.09 on sea freight, plus a 15 percent GST loading that brings the effective air cost to roughly $2.54 per parcel. The change targets low-value goods valued at or under $1,000.
The old system was absurd. Customs charged a flat $145.64 per inward cargo report for air imports, but a single report could cover thousands of parcels. Offshore e-commerce giants and their logistics partners gamed the structure, paying as little as 7 cents per parcel. Smaller importers filing modest volumes paid up to $36.40 per parcel. That is a 500-times disparity in the same system.
The result: taxpayers were covering 74 percent of border processing costs for low-value imports, a subsidy worth approximately $70 million a year. Customs warned that without reform, ongoing Crown funding increases would be required indefinitely. Ending that was not controversial. It was overdue.
24 million parcels and counting
The scale of what has happened at the border makes the levy look modest. Low-value goods imports more than tripled from 7.8 million to 24 million packages annually between 2017/18 and 2023/24. Customs Minister Casey Costello told NewstalkZB that border control simply cannot cope with that volume, and the numbers are still growing.
Biosecurity Minister Andrew Hoggard added that the flood of parcels compounds risks well beyond cost recovery, noting that protecting against biosecurity threats, illegal drugs, and criminal activity costs the economy hundreds of millions annually.
Over the four years from 2025/26 to 2028/29, the new regime will shift $71 million in costs from taxpayers to importers and exporters. That is real money returned to the Crown. It is also, in the context of 24 million parcels, about $2.50 each.
Why retailers shouldn’t pop the champagne
Costello has framed the levy partly as a competitive fairness measure. “You have to ask, what about the New Zealand retail businesses that are paying GST, paying the cost of running a business, employing staff in New Zealand?” she said.
She is right about the principle. But $2.54 on a $10 Temu purchase does not close a competitive gap built on Chinese manufacturing costs, zero commercial rent, no domestic payroll, and logistics subsidised by a platform burning through investor capital to acquire market share. The levy is a rounding error on the structural advantage offshore platforms hold.
Retail NZ spokesperson Carolyn Young has identified the deeper problem: “It’s a two-speed economy – people are spending overseas, not domestically.” Retail spending in December 2025 was down 0.1 percent despite recovery talk. Temu entered New Zealand in 2023 and reshaped purchasing habits faster than any regulatory response could track.
Consumer NZ warned the levies could impact ultra-cheap items, but BusinessDesk’s more measured assessment, that costs will be “nudged up” rather than dramatically increased, is the honest read.
The harder questions nobody is answering
New Zealand is following other countries in tightening rules around cheap e-commerce imports. The EU is phasing out its EUR 150 de minimis threshold. The US moved to eliminate its $800 threshold for Chinese goods. Australia is debating GST enforcement on low-value imports.
New Zealand’s action is narrower than all of them. It addresses an operational charging anomaly at the border. It does not touch de minimis thresholds, digital services taxation, or the broader question of whether the regulatory framework is built for a world where millions of small packages arrive from platforms that employ no one here and pay no corporate tax here.
GST enforcement on offshore platforms has improved since the 2019 changes requiring offshore suppliers to register and collect, but compliance and audit at this scale remain genuinely difficult. Those are the policy levers that would actually change the competitive equation. A $2.21 processing fee is not one of them.
A fairness fix dressed up as a lifeline
The government fixed the easy part, and it deserves credit for that. Subsidising border processing for offshore e-commerce platforms with taxpayer money was indefensible, and Cabinet approved the change in March 2025 after Costello first signalled it in April that year.
But the market has already moved. Consumers who discovered they can buy turtle-shaped incense holders, vine clips, and cat toys for a fraction of domestic retail prices are not switching back because of $2.54 per parcel. Retailers waiting for government to level this playing field will be waiting a long time. The levy corrects a tax fairness problem. It does not correct a market one.
Sources
- Newsroom: Too much, Temu: New Customs levy ends taxpayer subsidy for cheap parcels (2026-03-06)
- JetWorldwide: Prepare for the New Zealand Low-Value Goods Import Levy (2026)
- FMCG Business: Border fee changes make system fairer (2026)
- NewstalkZB: Casey Costello on changing fees and levies for small parcels (2026)
- The Spinoff: Has Temu fundamentally changed how New Zealanders shop? (2026-02-16)
- NZ Customs: Cabinet approves fee changes for border management of goods (2025)
- BusinessDesk: New border levies expected to nudge up online shopping costs (2026)
- CEP Research: New Zealand to end loophole for cheap e-commerce imports (2026-03-12)