Friday, August 6, 2010

Calculating prices after GST changes

There has been some dodgy maths in the New Zealand media recently around how much things will cost after the GST increases in October. The rate will be increasing from 12.5% to 15%, so some media are simply adding 2.5% on top of the price. Unfortunately, the calculation is not that simple. First, you need to remove the current GST portion, and then calculate the new price with the new GST rate:

Unfortunately, the calculation is not easy to do in your head: 46 × originalprice / 45. Another way of looking at it is to add 1/45 of the current price, or ~2.22%


Post a Comment