It is today 12.5%
Tomorrow it will be 15%
Ahh I hear some say 15% - now that will be an easy calculation than 12.5%
Not so dear reader. Why you ask? Because 12.5% is 1/8 (as a fraction).
Whereas 15% is 3/20
To calculate GST on a price all you did for many years was multiple by 1/8
Thus cheapo car GST exclusive = $1000. GST to be added 1000x1/8 = $125. New price $1125
(Although I prefer the direct 1000x 1.125 = $1125 as the quick way)
Now we have at present the following situation here in NU ZULUN
Cheapo car. $1000 (GST exclusive) and $1125 (GST 12.5% inclusive)
Now we have to find Price a 15% GST for the said cheap car.
Well if you start with $1000 (GST exclusive) it is plain driving!!!
1000 x 1.15 = $1150. No problem. Easy peasy and all that sort of thing by jingo.
But folks what if you want to calculate the price (15% GST) when you start with the 12.5% inclusive GST car? ahhh there's the rub!
Do you simply go 1125 x 1.025 (that is adding the extra 2.5% GST)
Becos .... 1125 x 1.025 = $1153.13 oh dear you see that is $3.13 too much.
But I suspect some will do just that.
What is the answer to the question how do we convert $1125 (GST 12.5% inclusive) to $1150 (GST 15%)?
Answer 1125 x 1.02222222222 = 1149.9999999 which is as good as $1150.
AAAh but some say we want a fraction ....we want a fraction ... we want a fraction ...!
What is 1.0222222 as a fraction?
Well the fraction 5,111,111 over 5,000,000 has been suggested.
Question: How do I convert a price at 12.5% GST Inclusive to one at 15% GST????
Answer: Multiply it by 1.02222222 (not 1.025!)
Thanks to our national government.
To sum up: A 2.5% gst increase is a 2.22% increase on current prices in the shops.
'The doggies bawl - and bawl and bawl
Deep in the heart of Taxes'.