GST 'Will cost woolgrowers $7M’

Press, 14 October 1985, Page 38

GST 'Will cost woolgrowers $7M’

PA Wellington Woolgrowers will be faced with additional financing of about $7 million a year under a GST rate of 10 per cent, the Wool Board has told Parliament’s Finance and Expenditure Committee.

While GST was being promoted as having a "neutral” impact on farmers, they would still incur “very significant” extra costs as a direct result of the proposed system of GST administration.

“Woolbuyers will be faced with the cost of financing the GST component on all their wool purchases from the date payment must be made until the time the Inland Revenue refunds the tax,” said the board’s general manager of planning and operations, Mr J. G. Sinclair.

“With a GST of 10 per cent we estimate this additional financing cost to be in excess of $7 million per annum,” he told the com-

mittee, hearing submissions on the Goods and Services Tax Bill.

The board would like to see GST returns for the wool industry shortened from one month to a week, and for their refunds from Inland Revenue to come back within another 14 days.

A suggested alternative, although not the board’s preferred option, was that wool be zero-rated at the point of production, with GST being levied only when it entered local manufacture.

More than 200 submissions had been received on the bill and about 120 wish to be heard by the committee.

The Institute of Valuers bad suggested in its submission that exempting land from GST could result in problems for land transactions.

“While the concept of excluding land on the grounds that it is not ‘consumed’ is a purist one, land is nonetheless a commodity which is

traded, developed and redeveloped, and, when built on is inseparable from the improvements (buildings) which give rise to rentals ... generating consumer spending and. GST revenue,” said the submission. The Returned Services’ Association had asked that its subscriptions be exempted from GST. They were financing the internal administration of the association, and should therefore not be described as a “taxable activity.” Sales at the R.S.A.’s chartered clubs would be subject to the tax through the Sale of Liquor Act, but the association was not looking for any dispensation there, said its spokesman, Mr D. B. Quigley. “Our sole concern is that the traditional benevolent nature of our organisation will be prejudiced by the imposition of a tax on the means by which our association is funded,” he said.