Retailer forecasts higher GST

Press, 24 February 1986, Page 21

Retailer forecasts higher GST

PA Timaru A leading New Zealand retailer and member of the GST advisory committee, Mr Alan Martin, thinks the 10 per cent goods and services tax level will be only an introductory rate. Giving his personal observations at a retailing seminar in Timaru, Mr Martin said although he supported the concept of the tax, he predicted it would be universally unpopular. “Changing over to dollars and cents was simple compared to what’s going to happen with GST,” he said.

“It will be enormously disruptive and it could take up to a year for the market to settle down.” Mr Martin, of the L. V. Martin and Son group of companies, said GST would work. But it would not be as simple as it could have been and there were still important issues being debated by retailers.

One was whether pricing of goods should be tax-inclusive or tax-exclu-sive. He produced a paper and charts to contend that price increases would be lower if tax was deducted before adding a margin, while prices would be higher if tax was added before adding the margin, perhaps as much as 33 per cent more in some cases. Emphasising that they were his personal views, Mr Martin said he did not think the 10 per cent GST level would remain at that rate for very long. Overseas experience showed that Britain’s VAT rose from 0 to 25 per cent within 18 months on selected items before settling down. Similar taxes in Sweden were at 23 per cent while the Netherlands charged a 19 per cent GST.

Mr Martin said the Government had already had dummy runs on aligning taxes, with changes to cosmetics and record taxes, and he thought the best time of the year to align all sales taxes would be at stocktaking, on March 31. Mr Martin was a member of the three-man Brash advisory committee on G$T which received

1500 submissions from groups and individuals, many of whom sought exemptions from the tax.

“The GST principle is understood only by a few. There is an enormous education job to be done.”

He told the business people that despite the problems, GST was still the right thing to do. It would rid the community of various sales tax levels.