Complaints roll in to watchdog on GST-rip offs

Shoppers flocked to service stations and supermarkets to spend up before GST rose to 15 per cent. Photo / Greg Bowker

More than 30 people have complained to the Commerce Commission believing they have been ripped off by businesses using GST as an excuse to charge higher prices since the 2.5 percentage point rise on Friday.

Commerce Commission spokeswoman Allanah Kalafatelis said the majority of complaints appeared to be about prices rising much higher than 2.5 per cent.

Retailers were allowed to charge whatever they wanted for goods and services, but if they claimed the price rise was because of GST rising and that was found to be misleading, they could be in breach of the Fair Trading Act, she said.

Ms Kalafatelis said the commission had received other complaints before the GST rise centred around customers being charged the higher rate of 15 per cent before the tax came into effect on Friday.

"We haven't put the complaints through the assessment process yet so it's hard to work out how many of those have a valid point, because within that number there will be some that are just from people who don't understand that the commission is concerned with whether it's misleading under the Fair Trading Act - not just that the price has gone up," she said.

"If someone is concerned that prices have gone up, that's not an issue that's for the Commerce Commission."

Ms Kalafatelis said a business didn't have to offer a reason for the price increase but if it did, it was not allowed to be misleading.

"What we're concerned with under the Fair Trading Act is simply whether the price increase has been misrepresented.

"The sorts of things that are coming in - the ones where there may be an issue - are things like a price increase from $55 to $65 and that being attributed to the GST increase."

The commission is sorting through the complaints this week to decide if they need investigation. Businesses in breach of the act may be sent compliance advice or warning letters, or can be taken to court.

Businesses face maximum fines of up to $200,000 and individuals up to $60,000.

The GST rate change did fuel a mini-shopping rush. Shoppers flocked to service stations and supermarkets to spend up on petrol and groceries before GST hit 15 per cent.

Paymark, a network which processes 75 per cent of the country's electronic transactions, has revealed that consumers spent $35.8 million more on September 30 than they did on the same day last year.

The most spending took place at petrol stations (up 44 per cent) and supermarkets (up 33 per cent). Sales for building supplies and hardware items went up 145 per cent and 207 per cent, respectively.

Travel agents went up by 46 per cent and electronics sales up 89 per cent.

New Zealand Retailers Association chief executive John Albertson said spending for the month (which was up 3.6 per cent on last September) was better than expected.

"The consumer's spending a bit more now they've finally got a bit more money now the tax cuts have come in and hopefully that will bode well for a reasonable finish to the year for retail."