CALCULATING GCT II

On Sunday May 1, 2005 the increase in the General Consumption Tax to 16.5% became effective. This presented two new challenges for many consumers. One was how to quickly calculate 16.5% of the commodity being purchased. The other was how to gauge the level of increase and be satisfied that the increase was in the order of 1.5%.

With respect to the first challenge, one quick method is to use your cellular phone calculator or other pocket calculator and multiply the price of the commodity by 1.165. The answer obtained provides the price of the commodity inclusive of the 16.5% GCT.
In respect of the first challenge, below is a quick scale that provides a reference for what consumers should expect in terms of the additional cost to your usual budgeted spending.

	Value of Purchase	Additional Cost due to 1.5% 
				increase in GCT

	     $10.00		   $0.15
	     $100.00		   $1.50
	     $1,000.00		   $15.00
	     $10,000.00		   $150.00

As seen from above, the cost increases as the value of purchase increases (PAY AS YOU SPEND).
To break this down even further, if a householder spends on average a total of $10,000.00 per month for utilities and groceries inclusive of GCT, then with the new GCT that householder should anticipate spending some where in the order of $10,150.00; an increase of $150.00. (Assuming the items being purchased remained the same).
Consumers can use this guide to anticipate increased spending and to trigger questions for clarification if they make a purchase and the additional cost falls outside of the expected increase. Vendors can also use the above information as they too become familiar with the new calculations and for their own budgeting and forecasting with respect to filing their GCT returns.

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