Retailers still to decide how to handle GST rate

Retailers still to decide how to handle GST rate change with one month to go

A retail sector survey by leading mid-tier accountancy firm Staples Rodway has discovered that while most retailers intend to increase prices, there are still plenty yet to decide how they will handle the increase from 12.5 per cent to 15 per cent, which comes into effect on October 1.

Close to 100 businesses across Auckland and some in the Hawkes Bay responded to the survey. The retailers represented a broad range of sectors including sporting goods, drycleaning, printing and publishing, beauty, leisure, jewellery, liquor, gardening, hospitality, stationary, homeware, apparel and office equipment.

The retailers were asked which of the following was likely to be the company’s position on the upcoming GST rate change: Increase prices to reflect the change; absorb the change; yet to decide how to handle the change; wait and see what competitors do before making a change.

The largest percentage of retailers, 48 per cent, said they would increase prices, 14 per cent said they would absorb them, 28 per cent had still to decide what they were going to do, four per cent were going to wait and see what their competitors do, and six per cent were going to increase the cost of some items and absorb it on others.

Staples Rodway Tax Director, Andrew Dickeson, says what is clear from even this small survey is that only a month out from the change, many retailers have yet to decide what to do.

“The reality is that it will take quite some time to review contracts and update systems to cope. While 2.5 per cent sounds like a relatively small increase, the reality is that it is actually a 20 per cent increase on GST currently paid, which has the potential to have a significant effect especially on businesses already facing customer push back on prices.

“Not surprisingly most retailers surveyed are saying they will simply increase prices to cover it, however it’s not just a matter of changing all the stickers on products overnight on September 30. For some that will require a change in marketing strategy as well, particularly with products with a particular price point, like $39.95,” he says.

ENDS

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