Good and Service Tax

Goods and Services Tax is a tax on consumption of goods and services. The tax law was introduced in 1985, and tax was in practice after 1 October 1986. In New Zealand, the standard rate of GST is 15%. The burden of this tax is on individual consumers, as they have to pay additional tax on the purchase price of a good and service. There are some pros and cons of introducing GST:

Pros

• GST is an important source of revenue for the Government.
• GST can help to create fairness in the society. However, there are many different critiques in this point. With the introduction of GST, everyone has to pay tax. The rich and the poor have to pay the same amount of tax for the same goods and services consumed. 
• This is not a tax on income. Thus, it does not affect the individual’s income. If you work harder and earn more, there would be no deduction for GST on your income (there will be deduction for income tax in some countries). Thus, GST would promote productivity and efficiency in the economy. 
• Consumers have to pay more for their goods and services. Normally, sellers will increase the purchase price making the goods and services more expensive. Sometimes, GST will lead to inflation.
• This tax will create a burden on poor people as they have to pay additional tax of GST for the goods and services they buy. The poor people in society will be affected substantially by GST.
• Government will increase expenditures to introduce the tax and make sure people comply with the tax and collect the tax. 

Cons

• This tax will create a burden on poor people as they have to pay additional tax of GST for the goods and services they buy. The poor people in society will be affected substantially by GST.
• Government will increase expenditures to introduce the tax and make sure people comply with the tax and collect the tax. 

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