Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Statistics NZ clarifies impact of GST on CPI

Embargoed until 3:00pm – 22 January 2010

Statistics New Zealand clarifies impact of GST on CPI

Statistics New Zealand has clarified the impact on the consumers price index (CPI) of any change to GST.

Statistics NZ Prices manager, Chris Pike, says lifting GST to 15 percent could increase retail prices of goods and services that are subject to GST by 2.22 percent. Some commentators have been assuming the price increase would be 2.5 percent.

“A product priced at $100 excluding GST currently sells for $112.50. If GST were increased to 15 percent, that product would retail for $115, an increase of 2.22 percent, not 2.5 percent,“ says Chris Pike.

“There is also a second factor. Not all goods and services in the CPI basket are subject to GST. Housing rentals, school donations, and credit services are not subject to GST. Those items make up about 9 percent of the CPI, so about 91 percent of the cost of the CPI basket would be affected by a change in GST. This means an increase in GST to 15 percent would lead to a CPI increase of about 2.0 percent.” This assumes no change in price for goods and services that are not subject to GST. However, all food items in the CPI are subject to GST, so the increase in food prices would be about 2.2 percent, all other factors remaining equal.

Chris Pike stressed that these figures were based on the assumption that any new GST regime would apply to goods and services in the way current arrangements apply.

“This is the situation if all other factors remain as they are, if retailers pass on all the GST increase to consumers, and setting aside the possible indirect impact of other tax changes that might be implemented at the same time,” says Chris Pike.

Yesterday, Statistics NZ released the consumers price index (CPI) for the December 2009 quarter. The CPI fell 0.2 percent for the December 2009 quarter and increased 2.0 percent for the year to the December 2009 quarter.

ENDS

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Climate Summary: NZ’s Equal-2nd Warmest Year On Record

Annual temperatures were above average (+0.51°C to +1.20°C above the annual average) across the majority of New Zealand... 2018 was the equal 2nd-warmest year on record for New Zealand, based on NIWA’s seven-station series which began in 1909. More>>

ALSO:

GDP: Economic Growth Dampens In The September Quarter

Gross domestic product (GDP) rose 0.3 percent in the September 2018 quarter, down from 1.0 percent in the previous quarter, Stats NZ said today... GDP per capita was flat in the September 2018 quarter, following an increase of 0.5 percent in the June 2018 quarter. More>>

ALSO:

Up $1.20: $17.70 Minimum Wage For 2019

Coalition Government signals how it will move toward its goal of a $20 p/h minimum wage by 2021... “Today we are announcing that the minimum wage will increase to $17.70 an hour on 1 April 2019." More>>

ALSO:

Retail: IKEA To Open In New Zealand

Inter IKEA Systems B.V. is today announcing its intentions to grant the Ingka Group exclusive rights to explore expansion opportunities in New Zealand. More>>