Higher GST bad to Small Businesses

Small businesses have been kept out of the loop on the Government’s decision to hike up GST, the Green Party said today.

The Minister of Finance confirmed that there has been no specific research or consultation with small-medium enterprises (SMEs) before deciding to raise GST to 15%.

“I’ve owned a small business myself and am shocked that so little consideration has been given to this sector when making such a major decision as hiking up GST”, said Green Party Small Business Spokesperson David Clendon.

“What we need is a smart economy with smart taxes that ensures a fair go for everyone. Bumping up GST without hard analysis of the implications will only enlarge the divide between rich and poor.”

SMEs are the cornerstone of the New Zealand economy – approximately 450,000 SMEs make up more than 97% of all businesses and over 600,000 Kiwis are employed by SMEs.

“If the Government had spoken to business owners they would have realised how much disruption a decision like this can create for the industry.

“The GST rise will have immediate and on-going implications, especially so soon after a recession,” added Mr Clendon.

Changing the rate of GST incurs costs for any firm and for smaller businesses these added costs can create a dire financial situation.

 

“To cope with the GST rise, small businesses will need to prepare for inevitable fluctuations to demand and cash flow, major changes to their accounting system, a disjointed tax return and possibly an overhaul of all their product’s prices, which combined is no small task,” said Mr Clendon.

Read the Minister of Finance’s QWA response here: http://ourhouse.parliament.nz/en-NZ/PB/Business/QWA/4/3/c/QWA_02280_2010-2280-2010-David-Clendon-to-the-Minister-of-Finance.htm