Businesses are concerned that the GST rise will dampen down already weak consumer confidence with households expected to compare prices of goods even more closely, a survey claims.
GST is to increase from 12.5 to 15 per cent next Friday, on the same day tax cuts come into effect.
Accounting
software business MYOB commissioned a survey of 1000 households, of which 300 were also business owners, on household perceptions of the GST increase.
The survey found that 60 per cent of respondents expected the 2.5 per cent GST rise to have a significant impact on household spending.
Of the respondents, 80 per cent expect businesses to suffer from the increase as consumers downgrade spending.
MYOB New Zealand general manager Julian Smith said households would be paying very close attention to rising costs.
He said businesses had to ensure they met operational and compliance requirements, which included pricing, systems and supplier agreements.
"Businesses are going to need to look closely at how prepared they are for any change in consumer spending after the GST rise, and whether it will have a direct or indirect impact on their operation.
"Up until now businesses have been working hard to prepare for the tax changes. They have been updating their accounting systems, preparing to change pricing and dealing with contract agreements."
Smith said businesses now needed to be "very focused" on cash flow, stock levels and marketing to be prepared for the immediate after-effects of the GST increase.
