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Businesses who use the pending GST hike as a marketing ploy to drive sales ahead of October 1, but who fail to deliver on those increases could find themselves before the courts.
A net 32 per cent of businesses expect to be raising prices in the next year, down from
38.6 per cent in June, suggesting a number of businesses will absorb the GST increase, ANZ National Bank chief economist Cameron Bagrie said.
The results feature in the latest National Bank Business Outlook survey.
However the Commerce Commission said such a move may raise issues under the Fair Trading Act, if a business had intentionally mislead customers into thinking they were getting a better deal by buying pre the increase.
"If a business plans to raise prices in October and uses this in an advertising campaign, it is not a breach of the Act for the business to then change its mind and not raise its prices as the Act is concerned with the intention of the trader at the time the claim is made," a Commerce Commission spokesperson said.
"Where the business does not intend to raise its prices, a claim such as 'buy now to beat the GST rise in October', may raise issues under the Act," the commission said.
Meanwhile a business that raises its prices over and above the increase in GST should be careful not to mislead consumers about the reasons for the increase.
"They can not simply claim that prices have risen 'due to GST'," the commission said.
A company who is found to be in breach of the Fair Trading Act can be fined up to $200,000, and an individual up to $60,000 by the courts.
Bagrie said changes in consumer spending had forced some retailers to reassess their intentions ahead of the GST rise.
"What we have seen in the past four months is that as economic momentum softened pricing intentions have backed off a little bit.
"There is some tension in the market. If you look at costs such as GST it tells you there is going to be a lot of stuff moving up, but the bottom line is there is a bit of a reality check here in terms of whether consumers are going to be able to pay it."
Consumer New Zealand finance researcher Krista Matheson said consumers needed to be particularly mindful of prepaying large bills ahead of the hike.
"The rise in GST means you could save up to an extra 2.22 per cent by prepaying. However, that doesn't take into account the interest that you could earn by keeping that money in a savings account until payment is due," she said.
KPMG tax expert Peter Scott said next week's increase also threw up issues in the retail space around the return of goods purchased before October 1.
If someone purchased a blue shirt in September, but decided in October they would prefer the same shirt in a different colour, they should be able to get the shirt at the 12.5 per cent GST if that store had a return policy, Scott said.
"Things get complicated if someone says I brought a shirt but I want to return it and get something that is that is slightly higher in value. In that situation it would have to be a credit at 12.5 per cent and then issue a new sale at 15 per cent."
Scott said he had received a lot of last-minute queries from clients around certains aspects of the legislation, but felt most businesses were prepared for the increase.