On July 1st, Australia will change its tax system to include GST on virtually all goods and services, with some exceptions for food and financial services.

For SILICON CHIP this will have the direct consequence of a 10% rise in cover price. Despite Government publicity to the contrary, there will be no offsetting reductions in our costs since under the old tax system, newspapers, books and magazines were exempt from sales tax. I hope you will continue to support SILICON CHIP in spite of the price rise to come in July.

My thanks to our subscribers who have already had to bear the GST increase. Indeed, because the GST was back-dated to December 1998, we have had a GST liability on any subscription taken out since that time which ran past July 2000 (ie, 2-year subscriptions). That was a bit of a shock to us since there was no way to allow for it.

By the way, the July 2000 issue should go on sale late in June, so if you purchase it on or before the 30th June, you will avoid the GST for that issue at least (hint, hint!).

As far as electronic equipment and other products are concerned, some will be reduced in price and some will rise. That’s another point the Government hasn’t been keen to talk about (perhaps they don’t know?). Whether or not a product’s price rises or falls depends on the retailer’s normal profit margin.

If the margin is low, as in many consumer appliances, the price will probably drop a little, because the rate of GST is less than the rate of the old sales tax. But if the profit margin is higher, the retail price after GST is applied may well be higher.

In fact, it seems to me that many retailers could legally add more than 10% to their prices, especially if they are for imported goods, because of the big fall in the Australian dollar over the last 12 months. Unfortunately though, some retailers and businesses will feel constrained against this and they may well suffer in the long run. I hope not.

It’s not all black though; many businesses will benefit from the introduction of GST since it will give rise to a GST credit on inputs. And all taxpayers will benefit to some extent from the reductions in income tax.

On the face of it though, if there is a product you want to buy and you suspect it might be dearer after July 1st, buy it now.

Once again, I hope you will continue to support SILICON CHIP as we strive to maintain a big variety of projects and present them with as much detail as possible.