More Pain Predicted For Businesses With GST Rise

Media release: 24 September 2010

More Pain Predicted For Businesses With GST Rise – Survey

New Zealand businesses will need to brace for more heavy weather as the GST rise hits consuming spending, according to the latest MYOB survey of Kiwi households.

The survey, an Omnibus snapshot of over 1,000 New Zealand households – including over 300 business owners – conducted by Colmar Brunton showed that 85% of New Zealanders expect the GST rise to have an impact on households, with almost 60% expecting that impact to be significant.

The survey also showed that 80% of New Zealanders expect businesses to be hit by the tax and GST changes, with over half predicting ‘a lot’ of impact.

MYOB New Zealand general manager Julian Smith says the survey highlights the difficulties the business community will have to face in the coming weeks, particularly as the GST rise comes in effect on 1 October.

“What we are seeing from this snapshot of Kiwi households is that they are very aware of the GST change, and we expect it could have a big impact on household income and spending,” says Julian Smith.

“People are going to be paying very close attention to rising costs over the coming weeks, and are likely to adjust their spending accordingly.”

“For businesses around the country, the potential slowdown is concerning, particularly as the pre-GST period has not brought any significant rise in spending, and consumer confidence in recent surveys has taken a fall.”

Mr Smith says the GST rise has represented a ‘double-whammy’ for businesses, with both the operational and compliance requirements of the change and the effects on consumer spending to manage.

“As MYOB has been highlighting for some time, there’s a lot for Kiwi businesspeople to be across in the lead-up to the tax changes. These elements, like pricing, systems and supplier agreements – all of which take time and resources for businesses to plan and prepare for – have been underscored again in this survey.”

According to the survey, small businesses are likely to be hardest hit, with 74% of households and 68% of business respondents expecting the local small business community to bear the brunt of the GST rise.

Julian Smith says businesses are going to need to look closely at how prepared they are for any change in consumer spending after the GST rise, whether it has a direct or indirect impact on their operation.

“Up until now businesses have been working hard to prepare for the tax changes, updating their accounting systems, preparing to change pricing, and dealing with contracts, and supplier agreements,” says Julian Smith.

“Now they are going to have to be very focused on business essentials, like cash flow, stock levels and marketing, in order to be prepared for the immediate after-effects of the GST rise.”

“In recognition of this, MYOB will continue to focus on providing information, advice and support to help make business life as easy as possible as Kiwi business people face this new challenge.”

“Even though the spending fall might be short lived, it’s going to be a challenging time for business, and they are going to need all the support possible.”

- ENDS -

© Scoop Media