Chief information officers, always with an eye on their budget and how they account for spending, will be paying closer attention than most to the coming Budget. The government has signalled a tax overhaul, cutting rates at every level of income while raising GST. The news, however, looks good – at least to this chartered accountant. Yes of course, it’s true that consumption taxes usually hit those on low incomes disproportionately. Then again, as we have constantly heard from successive governments, over-consumption is something of a national problem. Some argue it might well have contributed to the recent recession. Consumption taxes also tend to be transparent and equitable. Even drug dealers (they say) get hit by GST, which was first introduced in this country in October 1986, at 10%, and was then ramped up to 12.5% three years later. But as an accountant, what I am most interested in is how any new measures will work in practice. For starters, of course, 15% will be more of a pain for CIOs to calculate than the 12.5% business operators have long been accustomed to, which for getting from the GST-inclusive to the GST-exclusive amount simply involves dividing by nine and multiplying by eight. But the divisors and multiples for 15% won’t even be close to whole numbers. The best option would have been 16% (divide by 6.25, multiply by 5.25) or 20% (divide by 6, multiply by 5). Oh, that we kept things that simple! If GST were to go up to 20% (the UK, after all, levies 17.5%) then income tax rates could come down even further – say to 25% or even lower. But that would throw the question of how one maintains a level of support for those on low or fixed incomes into even starker relief. Any change in the coming Budget will therefore quickly become something of an IT issue – even a mini-Y2K situation – for many businesspeople, depending on the software and systems you use. Assuming you have software that allows for a variable GST rate, though, the issue ought to be simple for most service providers. The difficulty will be most keenly felt by organisations that have specifically priced around levels that are thought to trigger spending. Take an item priced at $1.99 including GST. For some retailers time will need to be spent reworking the margins across their stock lines to maintain such tempting prices – while still achieving the desired overall gross profit. Irrespective of how businesspeople mediate such questions, the impact for consumers will be increased costs. That’s because our country’s GST collection continues to be very simple compared with most international systems. New Zealand is not stuck with the kind of convoluted systems that in, say, Australia see the GST status of a chicken change depending on whether it has been cooked or not. New Zealand, on the other hand, allows few exemptions from GST, the most notable being financial services (good news for those with high mortgages). On the other hand, as noted, it has also indicated that there will be reductions in income tax. Overall, the government argues, this should translate into minimal impact. Expect to hear much in the way of international comparisons over the coming weeks. New Zealand’s GST rate is significantly higher than most in the region but a little less than the rich-world average, according to a recently published survey on indirect tax rates compiled by KPMG Asia Pacific. KPMG found that the average indirect tax rate in the world is 15.25% – lower than the rate likely to be flagged in the May Budget, but significantly more than the 10.8% rate across the Asia-Pacific region. Australia offers a more interesting comparison, not least because our larger neighbour allows for a raft of exceptions not available in New Zealand, where only rents collected on residential rental properties, donations and financial services fall outside the GST net. Businesses exporting goods and services from New Zealand are also entitled to ‘zero-rate’ their products – which is to say, they charge GST at zero percent. Australia is newer to GST than New Zealand, with the tax – invariably referred to across the Ditch as theGST – having only been introduced in July 2000. Among the notable difference is the exemption-free status given to fresh food, education and health services, as well as for government charges and fees that are themselves in the nature of taxes.   Australian planners argue that their exemptions are more humane; their New Zealand counterparts say they simply complicate the system. Irrespective of where it takes place and what the conditions and exemptions are, one thing that’s been common to both countries is the fact that a GST hike boosts retail in the days before it takes effect, but then things tend to quieten down for a few weeks as people adjust. As for the nation’s CIOs, we shall see.