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EU Plans to Tax Internet Sales
Arctic Fox writes: "In a bid to help European online sales, the EU is planning to tax online transactions. The article on Yahoo, says that the taxes will apply only to products downloaded from the internet, such as software,videos and music. They may elect to tax physical items (books, hardware,etc) at a later date. American companies will be forced to charge European customers the appropriate VAT in their home country. No details on how this will be enforced."
The Deloitte and Forrester research companies measure progress in the growth of e-commerce and forecast that by the end of 2002, online sales are expected to exceed $1 trillion, consisting of business-to-business sales of $842 billion and business-to-consumer sales of $180 billion (5). What effect could an Internet sales taxes have on these projected online sales? A study by the National Bureau of Economic Research found that the imposition of sales taxes could reduce online spending by as much as 30%. A 30% reduction in projected online consumer sales of $180 billion means $54 billion in lost retail sales. A 5% tax rate on the remaining $126 billion in sales would yield $ 6.3 billion in new sales tax revenues, but result in a net loss of $ 47.7 billion to the economy. Even if a 3% sales tax resulted in a more moderate 10% reduction in online sales, the $18 billion loss in sales volume would far exceed the $ 4.86 billion in new sales tax revenues.
These are striking numbers, even if US-centric. The EU should really be careful before instituting any such thing...
So the difference from today is that it will save customs for a lot of work since they currently are sending me a bill for the taxes after I got the package. They are also months behind as it is.
Anyway before ranting about having to pay taxes on internet sales, I just wanted to say that the taxes already are there if you follow the law, but with the change so that the internet companies have to charge for the taxes, it should be easier for us buyers to get stuff from the internet without having to deal with all those mails and bills from customs afterwards.
The only big hurdle is I see it is a way to implement it without killing the small shops outthere.
They may elect to tax physical items (books, hardware,etc) at a later date.
Come on, is this 2002 or 1992? Seriously, the other part of the news (i.e. taxing online transactions for online goods) is totally valid, because it's not being done yet, AFAIK.
There is a concept of EU's taxation area, which includes pretty much the whole EU with a couple of exceptions (like Jersey). Since something like 1993 there has been the EU "Single Market", and most physical goods imported from elsewhere have been subject to VAT. If I order something from for example the US or Australia or Japan I have to pay VAT if the package gets caught in the customs. If I order something from the UK or France or Germany, who cares, it's from the taxation area, and taxes are assumed to have already been paid. Many European online vendors have VAT already included in their prices, and for example Amazon.co.uk charges the VAT based on the destination country.
At least some Canadian online vendors go around VAT by sending their shipments to the customer from some country in the EU. The package isn't subject to VAT if it's sent from France or Belgium. I don't know the legality of this, but the concept sounds somewhat dubious, despite allowing cheaper prices for the customer.
At least in Finland the key is to order less in one package, because our customs don't bother to charge less than 10 euros. I have something like 90 DVD titles (some of them being 5-6 disc boxes), with almost all of them being ordered from the net, and only 15 of them originate from the EU taxation area. I haven't paid VAT (22% in Finland) or customs (3.5%) for a single one of the imported ones, because I order only one or two discs at a time.
More information about VAT is available at European Union's VAT info page.
in saying.. "How is this going to help e-commerce??" and so on. It's simple.
Europeans already pay VAT (Value Added Tax) on purchases made within their own countries or the EU as a whole.
This means that buying stuff from the US can work out cheaper than buying it from your own country. So, by forcing US companies to tax EU citizens on purchases, this will force consumers to buy from e-commerce sites in the EU.
This sounds fair enough, but it's actually extremely unfair. For a start, many things are far cheaper in the US, or aren't ever available in the EU.
I'm a big Jewel fan, and her album came out in the US last year, so I ordered it from Amazon.com and paid about £15 in all, including delivery. Amazon.co.uk wanted £20!
I'd fully support the EU's ideas on this one if things in the EU were competitively priced. They're not. The EU business world is governed by cartels intent on driving prices as high as possible. It's only in the past year that CD prices have come down to US levels.. we used to pay up to three times more just five years ago!
So if the EU wants us to buy from EU stores, perhaps the EU should be a bit more like the US and open up its economy and not be so bureaucratic! If the US can have cheap gasoline and cheap CDs, I'm sure as hell the EU could too (since the EU is technically richer than the US and all).
mogorific carpentry experiments
EU shoots itself in the foot yet again...
Guess what? EU tax laws are NOT ENFORCEABLE IN THE UNITED STATES! Officials of American companies that don't have a foreign subsidiary that can be pressured (like Yahoo France was) will no doubt roll on the floor laughing hysterically, and then start counting the extra sales they'll pick up by underpricing the companies that do have to abide by EU stupidities.
The EU cannot enforce this outside the EU, and they know it--look at their FAQ! The "enforcement" section is all about voluntary compliance--which will no doubt be a lot like the "voluntary compliance" where customers are supposed to voluntarily add required state sales taxes to mail orders here in the U.S. NOBODY IN THEIR RIGHT MIND PAYS TAXES VOLUNTARILY!
If I want to give my money away, I give it away to a church or charitable organization, not the eternally-corrupt, wasteful government.
In the U.S., mail order companies are only required to collect sales taxes in states in which they have an actual storefront presence because there are Constitutional problems with forcing a private business to act as a tax collector in another state. The same laws and issues will prohibit any legal requirements to collect taxes for a foreign authority such as the EU. If Lousiana can't force a California mail-order business to collect sales taxes from a Louisiana customer, what makes those idiots in the EU think they can?
---dragoness