A hike in GST from 12.5% to 15% would drive up most prices by 2.2% and the CPI by 2%, according to Statistics New Zealand.This would mean the following price increases:* Filling up a medium sized car with petrol – $95.15 to $97.24;* Movie ticket &nd
A hike in GST from 12.5% to 15% would drive up most prices by 2.2% and the CPI by 2%, according to Statistics New Zealand.
This would mean the following price increases:
* Filling up a medium sized car with petrol – $95.15 to $97.24;
* Movie ticket – $18.50 to $18.90;
* 2 litres milk – $4.80 to $4.91;
* Loaf of bread – $3.79 to $3.87;
* 2.5kg potatoes – $2.99 to $3.05;
* 15-pack beer – $23.99 to $24.51;
* Hamburger – $5.00 to $5.11; and
* 46" widescreen TV – $2491 to $2546.
Statistics NZ Prices manager Chris Pike said lifting GST to 15% could increase retail prices of goods and services that are subject to GST by 2.2%.
"A product priced at $100 excluding GST currently sells for $112.50. If GST were increased to 15%, that product would retail for $115, an increase of 2.22%, not 2.5%," Mr Pike said.
Also, not all goods and services are subject to GST. Housing rentals, school donations and credit services are all exempt.
Since they make up about 9% of the Consumer Price Index – a measure of inflation – about 91% of the cost of the CPI basket would be affected by a change in GST.
This means an increase in GST to 15% would lead to a CPI increase of about 2.0%, Mr Pike said.
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%, all other factors remaining equal.
"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," Mr Pike said.
