From an overall perspective, the tax changes would be good for the sharemarket, as long-term gains from productivity and GDP growth flow through to company profits and investor returns. Miners are penalised by the loss of accelerated depreciation under the Ralph Reforms, but benefit from cheaper inputs, particularly transport with the cut in diesel fuel excise. Manufacturers too will benefit from lower inputs. Specific sectors such as brewing will draw the same benefits. While beers from the glass in hotels are expected to rise some 8 per cent, beer drinkers are a resilient lot and tend to absorb such rises, meaning volumes for brewers shouldn't be overly affected.
Economists call it low price elasticity.
Salomon sees that other vice, gambling, as being a net beneficiary for the same reason, and costs may be lower for the house because gaming machines attracted a 32 per cent wholesale sales tax. Overseas experience actually suggests that retailing, the sector truly at the coal face of the changes, performs well in the early period after the introduction of a value-added tax. That would be good for the likes of BBC and Harvey Norman. Another factor to keep in mind will be the relative level of competition in an industry which, GST or no GST, is the ultimate determinant of price. More competitive industries will be forced to pass on any savings from the tax changes, while others may have more leeway.