Channel largely unprepared for GST

Channel largely unprepared for GST

The channel is not ready for the GST, according to a recent International Data Corp (IDC) report.

In fact, 64 per cent of the 235 second-tier resellers, VARS and system integrators surveyed will not even begin to prepare for the GST until the second quarter of next year.

Even more drastic is the 18 per cent who will leave it to the very last minute - June 2000.

"The channel doesn't understand the GST and is not aware of its implications, so it is not acting yet," said IDC analyst Rupinder Toor.

The channel is also concentrating on Y2K operations, with GST's later deadline putting it well down the list of priorities. "There are so many immediate things happening that GST is not yet a concern for the channel," said Toor.

The lack of detail so far revealed in the GST legislation has also discouraged the channel to gear up for its implemen-tation. "The tax is still being formed. The Government definitely needs to be more proactive in informing people about what is going on," said Toor.

Yet resellers and retailers need to start thinking about the GST, how it will affect business and what it will take to make systems GST-compliant.

The first priority for the channel, which predominantly deals with small businesses, should be an awareness of potential cash-flow difficulties induced by the GST. "Companies with annual revenues of less than $20 million will have to pay their GST inputs to the Tax Office within 30 days. This may well create a short-term cash-flow problem and companies would do well to rethink their 60-90 days credit period," said Toor.

Sales slowdown

Seventy nine per cent of respondents also predicted a slowdown in sales as a result of the GST because of customers waiting for the price of goods and services to come down after the tax is implemented.

Toor suggested that an increased awareness of GST will enable the channel to devise solutions to these problems, with vendors and the Government responsible for this education campaign.

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