Food prices could rise by 2.2% should GST go up to 15%, Statistics New Zealand says.Prices manager Chris Pike today expressed concern about speculation that retail prices of goods and services could rise 2.5% should GST go up, as was suggested by this wee
Food prices could rise by 2.2% should GST go up to 15%, Statistics New Zealand says.
Prices manager Chris Pike today expressed concern about speculation that retail prices of goods and services could rise 2.5% should GST go up, as was suggested by this week's Tax Working Group report.
“Not all goods and services in the Consumer Price Index basket are subject to GST,” he said.
Housing rentals, school donations and credit services – which are not subject to GST – make up about 9% of the CPI. That meant about 91% of the cost of the CPI basket would be affected by a change in GST, he said.
According to Mr Pike that would mean an increase in GST to 15% would lead to a CPI increase of about 2%.
“But that assumes no change in price for goods and services that are not subject to GST,” he said.
As all food items are subject to GST, he said food prices would increase by 2.2%, all other factors remaining equal.
“This is the situation if all other factors remain as they are, if retailers pass on all of the GST increase to consumers, and setting aside the possible indirect impact of other tax changes that might be implemented at the same time.”
The CPI fell 0.2% for the December quarter and increased 2% for the year to the December 2009, according to statistics released by Statistics New Zealand yesterday.
