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Retailers face a scramble to get new price tags on imported goods ahead of a tipped October 1 rise in GST, expected to be announced in today's Budget.
The Retailers Association says clothing, footwear and gift products imported by major chains are price-marked at the factory.
"It is critically important
for the industry that sufficient lead time is given so that pricing changes can be made," the association's chief executive, John Albertson, said.
In a submission to Finance Minister Bill English, he said that the October 1 implementation date was the earliest store owners could cope with the change.
"The ideal would be April 1, 2011, but we realise that this would be unlikely given that is an election year."
A GST rise will be sweetened by personal tax cuts, and based on past experience, the impact on sales is unlikely to be huge.
When it was increased from 10 per cent to 12.5 per cent in 1989, there was no significant effect on sales.
It is expected stores will hold prices of items where there is strong competition below existing price points, such as $99.99, but put up others by more than 2.5 per cent.
Accounting firm BDO said a GST rate hike would create compliance costs for businesses in modifying their paper-based or electronic systems.
"This could be time consuming and expensive if system changes are required, or if training is required to minimise error risk."
It also advised businesses to plan ahead for a spike in spending before the increase - and a fall following it.
"Businesses should plan ahead to take advantage of this opportunity - possibly even by encouraging consumers to pay upfront for recurring or ongoing goods/services - while avoiding being left with excess inventory or cash flow issues if demand subsequently dips," BDO said.
DB Breweries, which yesterday reported an increase in sales and profit for the past six months, also said there could be a dip in demand around the time of a GST increase.
Managing director Brian Blake said that was likely to flatten out reasonably quickly.
The increase was likely to come at the end of a tough winter for the hospitality industry, he said.
