GST compound rise??

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Batman

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#69137 3-Oct-2010 22:28

just thought of a hypothetical scenario after reading the coffee stories.

Let's say Coffee importers raise prices by 2.2% because of GST rise.
The middleman or distributor gets the coffee for 2.2% higher, then onsells to wholesalers for 2.2x2.2% higher because of their own GST.
Wholesaler sells to shop for 2.2x2.2x2.2% higher for same reason.
Shop has to sell to you for 2.2x2.2x2.2x2.2% higher for EACH commodity (eg milk, sugar, furniture, etc?) GST rise?

sorry my knowledge of finance is hopeless and my understanding of economics is "50-50": house prices will rise - ok, or it won't, so 50-50!

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#387499 3-Oct-2010 22:38

Businesses can claim the GST amount back. Coffee shops claims GST from govt. for wholesaler invoice. Wholesaler claims GST from govt. for distributor's invoice. This is why you will see business owners always asking for till reciept from gas stations, restaurants (entertainment tax) etc so that they can claim the GST back.

Do whatever you want to do man.

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#387500 3-Oct-2010 22:38

the prices are normally calculated "ex-gst" between wholesalers etc. the GST is really just passed down the line to the consumer. If a kilo of coffee cost $10+gst before the rise, then it should still cost $10+gst after the rise.

(of course if freight costs change due to petrol price, the NZ dollar falls etc, the price is going to change for an unrelate reason)

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wreck90

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#387503 3-Oct-2010 22:40

wrong.

The middleman /distributor/wholesaler/shop prices don't change at all because they trade in GST exclusive price (GST return allows GST paid to be offset against GST collected).

Only the end consumer pays the gst, since they are unable to claim it back in a gst return.

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#387523 4-Oct-2010 07:46

wreck90: Only the end consumer pays the gst, since they are unable to claim it back in a gst return.

Yep, it all just gets passed down the line at the same rate (not multiplied) to the poor schmuck at the end who is the only one that can't claim it back.

Lazy is such an ugly word, I prefer to call it selective participation

langi27

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#387703 4-Oct-2010 14:58

Is it just me or has every single business put up prices ontop of the expected GST increase, blaming higher logistices, purchasing, staff bla bla bla bla.

I went to get my sub of the day from Subway today only to find its gone $4.30, up 40cents, (about 10% increase) over the weekend I was finishing off my vegetable garden only to find the landscaping place has beefed there prices by about 15% plus also added an extra $10 for trailer hire when last week I got the trailer hire for free, I walked out paying an extra $15 ontop of what I was expecting.

Didn't the goverment say they expected us to be better off with the new tax rates? after a couple of days of prices going up by 10%+ I'm thinking I'm going to be alot worse off since everyone is doing it. Thanks Bill English, there's a reason you didn't get my vote.

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#387967 4-Oct-2010 23:16

Don't you think they may have put their prices up regardless of the GST increase? I know GST hasn't gone up since the 80s and yet prices seem to go up all the time. If I was a business and I knew GST was going up in October, I'd probably wait until then to put my prices up too. Would you prefer Subway had put their prices up to $4.20 a few months back when they wanted to and then up to $4.30 with the GST increase?

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#388141 5-Oct-2010 12:02

langi27: Is it just me or has every single business put up prices ontop of the expected GST increase, blaming higher logistices, purchasing, staff bla bla bla bla.

I went to get my sub of the day from Subway today only to find its gone $4.30, up 40cents, (about 10% increase) over the weekend I was finishing off my vegetable garden only to find the landscaping place has beefed there prices by about 15% plus also added an extra $10 for trailer hire when last week I got the trailer hire for free, I walked out paying an extra $15 ontop of what I was expecting.

Didn't the goverment say they expected us to be better off with the new tax rates? after a couple of days of prices going up by 10%+ I'm thinking I'm going to be alot worse off since everyone is doing it. Thanks Bill English, there's a reason you didn't get my vote.

I've seen the same thing. I think many vendors have piggy-backed their own price increases onto the GST rise to make it less obvious they are putting their prices up.....as the market is expecting a rise due to GST anyway.

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kyhwana2

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#388154 5-Oct-2010 12:21

Yeah, there goes any "savings" from the income tax cuts..

scuwp

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#388179 5-Oct-2010 12:46

kyhwana2: Yeah, there goes any "savings" from the income tax cuts..

Did you really expect there to be any...seriously?

No matter if they are red or blue or any of the other parties, they will always give with one hand and take away (more) with the other. The way things are going no one will be able to afford to live in NZ.

Lazy is such an ugly word, I prefer to call it selective participation

kyhwana2

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#388194 5-Oct-2010 13:02

scuwp:
kyhwana2: Yeah, there goes any "savings" from the income tax cuts..

Did you really expect there to be any...seriously?

No matter if they are red or blue or any of the other parties, they will always give with one hand and take away (more) with the other. The way things are going no one will be able to afford to live in NZ.

Nope, thus the quotes around savings..
Not to mention the ETS/ACC/Excise tax increases too..

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#388251 5-Oct-2010 14:10

scuwp:
kyhwana2: Yeah, there goes any "savings" from the income tax cuts..

Did you really expect there to be any...seriously?

No matter if they are red or blue or any of the other parties, they will always give with one hand and take away (more) with the other. The way things are going no one will be able to afford to live in NZ.

Funny, because when all is said and done, I should be better off with all the changes. You can't blame the government for businesses putting their prices up.

If you want to make the most of your tax cut, save more, consume less :)

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scuwp

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#388271 5-Oct-2010 14:32

If you want to make the most of your tax cut, save more, consume less :)

Nice idea, but when I take off my rose tinted glasses all I see are compulsory price rises we can't really avoid. ETS and excise duty on petrol (+ GST of course...a tax on a tax), rates (another tax on a tax) Insurance, power, phone, ACC levies etc etc.

And yes the government IS connected to just about everything. For instance did you know that road user charges (diesel tax) went up last week (+ GST) meaning that everything that goes by truck will now cost more. The price rises start somewhere, and the trickle down effect means the consumer has not choice but to pay.

Lazy is such an ugly word, I prefer to call it selective participation

langi27

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#388284 5-Oct-2010 14:52

I'm just brassed off that they have used this to put their prices up for whatever reason. I was expecting 2.5%, I got 10%+ thats a decent jump and one I can't afford, especally the week leading up to pay day when I'm skint.

graemeh

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#388327 5-Oct-2010 15:47

langi27: I'm just brassed off that they have used this to put their prices up for whatever reason. I was expecting 2.5%, I got 10%+ thats a decent jump and one I can't afford, especally the week leading up to pay day when I'm skint.

So you would have preferred they put the prices up 6.8% a month ago and 2.2% last week?

Don't forget it costs money to change the price.

langi27

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#388338 5-Oct-2010 16:07

yes I guess I would have preferred that they spread out the increases over time.

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