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Regulator warns on price rises and GST

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, Oct 8 NZPA - The Commerce Commission has warned the owners of The Dominion Post newspaper about using the rise in GST to explain a price increase, when the increased tax was the reason for only part of the 10c price rise.

The newspaper had used the GST increase to explain the rise in the price of its weekday edition from $1.50 to $1.60, but the GST increase alone would have resulted in a new price of $1.53, the commission said.

It had issued a formal warning to Fairfax New Zealand, owners of The Dominion Post, which accepted that the notice in the newspaper explaining the price increase was "incorrectly worded".

Fairfax had told the commission that the 10c price rise also included its annual scheduled price increase, which had been delayed from June.

Graham Gill, an enforcement manager with the commission, said businesses could increase their prices whenever they liked, for any reason.

But if a business offered a reason for the price increase it must not be misleading, Mr Gill said.

"To claim that an increase in price is due to the increase in GST, when the increase is far greater than the cost of the GST rise, is potentially a breach of the Fair Trading Act."

The warning to Fairfax was the first issued by the commission in relation to the GST increase, the commission said.

It was investigating four other GST cases, but most of the GST-related complaints received so far had been assessed as either unlikely to breach the Fair Trading Act or had not met the commission's enforcement criteria.

GST increased by 2.5 percentage points to 15 percent on October 1.

NZPA WGT mjd dw

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