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Big tax day goes smoothly despite fears

Published: 7:04AM Friday October 01, 2010 Source: ONE News/Newstalk ZB

Retailers have made it through the first day of the GST hike relatively trouble-free, with experts agreeing the transition to 15% GST has been a smooth one.

Many retailers worked through the night changing price tags to cover the rise in GST, although experts say some businesses will take longer to adjust. 

Phil O'Reilly of Business New Zealand says most have coped pretty well with the changeover and with much less difficulty and panic than his organisation might have expected.

"We've seen remarkably few problems although we may see a few teething problems over the next few days around some of these complex little issues like lay-bys and people sending their bills out late even though they did the work last month," O'Reilly said.

He said inevitably there would be some issues that would need to be dealt with.

"The nature of a complex economy is that that's always going to occur."

The Retailers Association says every attempt has been made to encourage members to be prepared for today.

Association spokesman Barry Helberg said extra staff training may be required, as well as computer software upgrades.

Rush to buy

Most petrol stations have lifted petrol and diesel prices by around seven cents a litre due to both the GST increase and a three cent fuel tax.

The increase saw some gas stations drained of fuel after last night's last minute rush before today's GST increase.

However the threat of higher prices didn't cause a general retail rush, despite some stores keeping their doors open till midnight.

ONE News also found a surprising number of retailers aren't lifting their prices at all for the time being, choosing to  swallow the tax hike.

"We're still in the middle of a recession and we felt for our gifting products and the products that are a bit more expensive, that we'd absorb it just so that it didn't decrease the volume that we're selling," said John van Gorp of T Leaf T.

Tax package

As well as the GST hike, the government's new tax package also kicked in today.

The Government's calculator shows that a $30,000 wage earner will get a net weekly gain of $5.29 after GST and income tax cuts are considered, while someone on $120,000 will be $52.78 better off.

Meanwhile, the Labour Party says the changes will only they benefit the rich.

Labour leader Phil Goff said the reforms involved an unfair distribution of freed-up money and that low and middle income earners were not getting enough to give them respite from recent cost of living increases.

"National's tax switch will do nothing to help these people. John Key and Bill English do not understand the pressure families are under with rising costs and stalling wages," he said.

The government's GST Advisory Panel has information to help businesses with the transition to the new rate of GST.