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."

Comments

This is the way it should be

[00_NOP]

If I download software from a UK site I have to pay VAT (17.5% sales tax) - why should it be cheaper to download it from the US.

And before all you anti-state libertarians jump in, remind me - how many millions of Americans have no health insurance because you won't pay for one?

Re:This is the way it should be

[SquierStrat]

A) How in the name of God is it my responsibility to pay for other's health insurance?

B) People who don't have health insurance almost universally (there are exceptions) don't have it because either they choose not to have it, or because they made poor choices which resulted in their inability to have it. Geez, even fast food places offer health insurance to full-time employees! At Chick-Fil-A here in Georgia they offer it at no cost to the employee!!!

C) Well, whys hould it be cheaper...hmm maybe because we're not a part of the EU and we shouldn't subject to your silly socialist laws and regulations (wake up, socialism does not work in the real world! It results in a crap economy, crap education, and crap health care, and eventually, pissed off citizens!) We're a sovereign nation. Instead of trying to get us to enforce your laws, try getting ISPs in your country's to enforce it. Charge a small user's fee. Then you'd make money off people who didn't even make online purchases...

Re:This is the way it should be

[akintayo]

Of course a Brit could point out that taxation without representation is practiced in the US. You do realise that non citizens pay income and sales taxes ?

American tax laws require the buyer to pay sales tax in the state in which he purchased it. It then expects the buyer to report these taxes when he files his tax returns. The systems seems to be doing the same thing, you pay sales tax to your local municipality

Re:This is the way it should be

[shilly]

Your comments are interesting and cogently put. I'd like to point out a couple of things. First, I agree that it is not the job of the US government to provide healthcare because that is how your constitution is written. Other countries have chosen other paths.
Second, while there are inherent inefficiencies in a state-provision or state-funded health system, there are inherent inefficiencies in a private-provision system too. In a state-provision system, there is bureaucracy and the lack of a competitive incentive. In a private system, there is over-supply (else there couldn't be competition), potential gaps (there is no market incentive to provide any particular service beyond its being profitable and not all services will be profitable), and the generation of huge amounts of information related to billing because of the third-party payer system. Additionally, there are micro- and macro-economic efficiencies associated with state-provision--for instance, a state-provision system gains efficiencies of scale as an insurer of risk and as a purchaser by virtue of universal coverage. See the Wanless report produced for the UK gov't by that notorious socialist Derek Wanless (ex-CEO of a big UK retail bank and not a man to look kindly on unnecessary state involvement in health) for examples.
My third point is, you already do pay a lot for healthcare through taxes -- about 7% of GDP. You pay another 8% of GDP in health insurance/direct payments. For that, you get potentially excellent healthcare but lack of coverage for some people (c40m) and variable coverage of some diseases. Here in the UK, by contrast, we pay about 8% (shortly to be somewhat more...) and we get universal coverage, more variable care and never up to the top standards that your CEOs and rockstars can afford, and some diseases also not properly covered. There are no 100% correct choices, but there are advantages and disadvantages to each and it's important to be clear-eyed and clear-minded about them.

Help internet sales?

[dhwebb]

How does adding a tax help anything? It gives users a reason not to buy online. Besides, what about shareware. The demo product is free, therefore $0 tax. Now the license # that I paid the vendor to email me is not taxable. Not to be insulting, but its nice to know the EU is just as whacked out as our US policies.

Fuck that!

[seldolivaw]

I worked for a dot-com in the UK which had to charge VAT on all purchases, based on the location to which it was shipping the item. The rules were different for every country -- the price threshold at which the tax applied, the tax rate itself, the types of items to which the tax applied -- and it was a nightmare to code a system which could handle every possibility. Enforcing this rule will only further discourage American companies from shipping to Europe -- something they're already aggravatingly unwilling to do.

When are governments going to grasp the idea that none of them have any jurisdiction over the Internet?

Related to US stance on steel?

[rediguana]

Does anyone else think that this is in return for the US stance on imported steel? I just saw an article on CNN about trade issues between the EU and the US, and thought hey, this makes sense from an EU perspective, if they are going to up barriers to exporting EU products to the US, then lets make it harder for US companies to make money from the EU - by removing the pricing advantage by addition of tax. I don't think this is really a taxation issue, I think its partial retaliation for the US imposing restrictions on imports into the US from the EU.

This means the EU will start blocking IP addresses

[mattso]

If you accept that they have no way to enforce this with companies that don't have a physical presence in an EU country(no US court will help them with this), logically they will be forced to block non-compliant web sites from EU countries. I can see it now:

1. EU finds high traffic/high volume download for money web sites that doesn't charge VAT
2. They send an informational message explaining you have to collect the tax from EU users
3. Some time passes, web site still isn't collecting VAT
4. Harsher message is sent threatening to block IP addresses from all EU countries.
5. More time passes. They block the web site, no one in the EU can access it.

Now it will be a bit difficult to "block" the IP address, but given the few number of paths into any country and the small number of companies running them, I believe it will be possible for them to shut off most access to a non-compliant site. By doing this they create a situation that might convince someone to reconsider collecting the VAT tax.

Even if smart users can "hack" their way around it, the company will find it's EU sales reduced to near zero. Plus if done right it could cut off email and other access(the block would work both ways). It's a very big stick and it's well within their reach.