Users tally GST pros and cons

More than half of the IT managers surveyed in a Computerworld straw poll are yet to determine the impact of the GST on their infrastructure purchasing budgets.

Of the 40 per cent of IT managers who have calculated the effects, most expect their infrastructure purchasing costs to decrease when the GST is introduced next year.

But Colin Campbell, IT manager at Guardian Family Pharmacies, is an exception.

"As most of our IT spend is on maintenance and services, we believe that costs will slightly increase post-GST," he said.

However, those IT managers that do predict a cut in infrastructure purchasing costs are not necessarily expecting to see the extra funds either.

Paul Fisher, IS manager at Isuzu General Motors, told Computerworld: "Any cost savings we realise, management will redeploy across other divisions."

Neville Clarke, IT manager at LeMessurier Timber, and Tim Beard, network administrator at Borden Chemicals Australia, said that they too would be forced to share any budget surpluses within their division with other company units.

Stephen Murphy, EDP manager at Dai-Iichi Kangyo Bank, said he won't see any residual benefit of the GST either.

"Our IT purchasing is done on demand from Tokyo, not from a budget," he said.

But for those who do get to keep their spare cash, the range of projects to which the money will instead be allocated varies greatly, the Computerworld poll found.

Brad Evans, IT manager at construction company Hooker Cockram, said: "We will spend more on hardware, particularly servers.

"We will also put more of an emphasis on server software and maintenance."

Meanwhile, Steven Lee, assistant IT manager at distribution company Hagemeyer, claimed: "We would use the extra money for unbudgeted costs such as temporary staff and extra equipment."

Stan Rychlik, IT manager at IT recruitment company Intellimark, added: "We would probably [spend] the excess money on the development of internet-based tools and services."

Currently hardware purchases carry wholesale sales tax of 22 per cent, which can be reclaimed in certain circumstances.

Software does not attract wholesale sales tax, although the software-carrying medium (such as CD-ROMs) attracts a 22 per cent wholesale sales tax.

Wholesale sales tax will be abolished on June 30, 2000.

From July 1, 2000, hardware, software, and contractors' rates (where the contractor earns $50,000 a year or more) will carry a 10 per cent goods and services tax (GST).

Registered enterprises will generally be able to claim GST back as full input tax credit for any hardware, software and contractors' time for use in the enterprise.

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More about: General Motors, Hagemeyer
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