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U.S. E-Commerce Sites To Collect EU VAT
A concerned US-based e-commerce company with inter writes "While we have all been fighting the Internet sales tax battle here in the U.S., the European Union of 15 countries has recently required that all U.S. companies with web sales to EU citizens start collecting the value-added tax on July 1, 2003. The Washington Post has a good article about this. It seems Ebay, AOL, and others caved in on this without much complaint. Can U.S. Internet taxation be far behind if we have to start collecting and reporting 15 different VAT taxes? And sorry Mr. or Ms. EU Citizen, your website subscription now costs 15% to 25% more, starting July 1. Hope you like this added value."
How can you collect sales tax on a used item? The tax was already paid here by the original purchaser.
Most items I sell are used or "prepurchased" or involve a service. None of these items are taxable here and are considered sold at yard sale or at auction. Neither of which in my state are taxed. For some reason, some live (in person) auctioners charge tax here, but they aren't suppose to. They are told to by local governments who "slip it in"
Again, if something is used, taxes have already been paid and it's benefits to society have also created revenue generation, which in turn, is more tax collected. Say I buy a printer at retail. I pay the sales tax. Then, I use said printer to print my envelopes, receipts, business cards, correspondence, pictures to sell, etc etc - generating more income for my business. I have also used said printer purchase to make more money to spend and thus taxed, giving even more money to the government for the printer!
A lot of people that collect tax on eBay and especially Yahoo NEVER pay that back into the government. This is like the bogus people that collect tax at flea markets or for service calls.
I will hope that eBay will just add the VAT to the total bill so that we don't have to collect it and pay into some sort of escrow.
Yell & scream & rant & rave... it's no use... you need a shaaaave ~ Bugs Bunny
Living in sweden, the only reason that I buy stuff from Amazon is that (even including costs for transports), the books are like 10-15% cheaper, and that music cd:s are like 25% cheaper. If VAT is added, this price difference will be void, and thus I will simply stop buying stuff from USA. It will simply be faster, cheaper and more convenient to buy stuff locally. My suspicion is that this is also the reason why the EU wants to add this tax: It is a way to force citizens to buy stuff from the EU instead, thus supporting the local industry.
People in the UK (and presumably the rest of the EU) have always had to pay VAT on things they have physicially imported. Why should the internet be any different. VAT is an important component in the EU model of taxation and closing this loop hole can only be good for our public services like schools and hospitals. People always moan about taxes, it can't be that complicated to implement.
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Economically, however, Sales Tax (or VAT as its called here in the UK) is a vital tool for regulation of the economy, as lower Income Tax and higher VAT encourages people to save (especially in conjuction with a higher base rate of interest on borrowing to discourage people to take loans out and encourage them to keep money in bank accounts)
An infinite number of monkeys will eventually come up with the complete works of
I was under the impression that in the UK VAT is not applicable to second had goods. i.e. you buy a car from a guy down the road, you don't pay VAT on it.
So why would EBAY have to add VAT to second hand goods sold online?
And sorry Mr. or Ms. EU Citizen, your website subscription now costs 15% to 25% more, starting July 1. Hope you like this added value."
Assuming that governments have to collect taxes somehow, why is this a bad way to do it, as opposed to income or corporate tax?
Although many Americans give the impression that they think all taxes are evil, over here in Europe we quite like having things like free health care for everyone, tidy streets etc. We think that it makes for a fairer and more civilized society, even if it means that we are all a little poorer (in monetary terms) than you guys. Many of us find the attitude of some Americans - that taxes and social government are 'evil' - frankly a bit bizzare.
Although I guess it is understandable looking at the current state of politics in the USA. How is it that you guys no longer seem to be bothered about such essentials of democracy as transparency and avoiding rid of conflict of interest in your political leaders?
>Why would you want to give your hard earned money to a government? Because you want the government to be able to provide services to all citizens. That's what a social democracy is all about. I for one have just received my university degree and I still have money on my bank account because education is supported by the government here in Switzerland. Thank you society! Hrshgn
You only pay the VAT once. As it stands now, you pay the tax free price to the retailer, then (supposedly) pay duty & VAT during import. Of course usually you don't do that because the package is just waved through (I've NEVER had to pay duty or VAT on any imports).
What will happen next month is that the VAT will be collected by the retailer, and they will be responsible for sending it to your government. The duty will still be chargeable on import (I assume), but you won't need to pay VAT twice.
---- Den ene knappen er powerknapp, den andre er Bender voice knapp "Bite My Shiny Metal Ass"
I do not believe that Europeans generally dislike the governmental structure of the United States, but rather the policy of the government which is significantly more to the right on the political scale. The way I feel is, if we have to become a big federal country in order to stand up to the US (which I sadly feel is increasingly necessary, for many reasons), then so be it. There will be drawbacks as well but we will have to accept them as the alternative is worse. Small independant countries are shark meat in today's world.
As for socialism, well, the EU institutions as such and the treaties that founded them really are fairly liberal (in the non-American sense, where liberalism is considered freedom, etc).
I think your comparison with the USSR is quite a bit off. We're talking about old and stable democracies with market economies.
We Europeans simply don't care about the US, we don't spend out days wishing we were Americans, we don't envy the US, we are not always comparing ourselves to Americans, we don't think we have a lot to learn from America, America is on the periphery of our consciousness.
We organise things (like health care) the way we like them, and we organise things (like taxes) the way we like them.
We are big and economically powerful enough that major (and minor) American companies *have* to comply with our laws if they want to benefit from our large market.
And if Americans don't like it, don't like us, don't like the way we do things, don't like the EU, guess what? We don't care...
A very good question, especially since this tax concerns non-physical goods such as web subscriptions, downloaded music and software, etc, that cannot be taxed at the border. I see three possibilities:
1) The small retailers will not bother with the hassle and expense of collecting tax for a foreign nation. The EU will not bother going after these retailers either, and all will be well.
2) The EU will force all EU ISP's to block net access to the small retailers' sites.
3) The EU (perhaps even with help from the US) will try and make these retailers reject sales from the EU.
This sounds like an administrative nightmare. The beauty of the Internet is that I can sell goods to anyone in the world who wants them, with a minimum investment in a website and the means to process credit card payments. This requirement could spell the death of that idea, and I find it incredibly selfish of the EU. What if every country made this a requirement? As a small retailer, I would suddenly find I have to collect taxes for the EU, certain US states, Russia, the Ukraine, Zimbabwe, Thailand, Australia, Venezuela... imagine the nightmare of doing administration for all this. Are they somehow counting on no other country implementing a similar policy?
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
Assuming that governments have to collect taxes somehow, why is this a bad way to do it, as opposed to income or corporate tax?
Because in a fair tax, the rich pay either the same, or more than the poor. Income tax handles this -- either with a flat percent or with increasing brackets. The problem with sales tax is that while Mr. Millionaire might buy more things than you do, he doesn't buy *proportionally* more things -- a man can only drink so much beer, after all.
So as a total percentage of income, Mr, Millionaire pays *less* sales tax than you! Not very socially progressive, eh? Not surprisingly, the rich have always hated income tax and preferred sales tax for exactly this reason.
That's complete BS. All receipts that are to be kept in any kind of official records MUST have the VAT amount and precentage shown, so all the stores are obliged to write such a receipt if asked (due to which allmost all modern cash registers print it automatically).
I guess, it's also a question of what you are used to, but I really got irritated in most US shops due to the fact that the listed prices did not contain VAT. IMHO it's nice to know how much the thingy your are about to buy will eventually cost with out calculator..
"There is a terrorist behind every bush"
But where is the money really going? If we assume for a moment that you have a government who spends their collected taxes wisely (not always true, I'll admit), then that money gets put to good use.
Such taxes will be used to pay for health care (here in the UK we have a nationalised health service, paid for by taxes), transport infrastructure (roads, rail, air etc.), education (again, here in the UK, schooling is paid for by taxes, and university education is mostly paid for by taxes), police, ambulance, fire services etc. etc.
If EU citizens were shopping in the US via the web, because it is cheaper, those taxes wouldn't be being paid, and the services that rely on them would be underfunded.
I can only speak from a UK perspective on this, but while our education, health etc. services are free from many US-citizen's perspectives, they are terribly underfunded. General elections are usually fought on the basis of taxation, and the population votes for the party offering the lowest taxation (a simplification, but it's almost this simple) -- so there is little growth in the amount of money that can be spent on public services.
To put this in perspective, a few months ago I saw a news item announcing good news: NHS patients with a specific serious heart problem had their operation waiting times cut by 6 months: the waiting time for the surgery was now just 18 months. I ask those Americans reading this: would you buy health insurance that had an 18 month waiting list for major heart surgery?
If I was faced with the choice of being able to buy a DVD for £15 rather than £20, or having a health service that actually worked, guess which I'd opt for.
"The noble art of losing face will one day save the human race"---Hans Blix
For instance, I know I don't pay anything towards machines for killing.
Really? Sweden does not have an Air Force? A Navy? An Army? Does not Sweden produce a very capable set of fighter jets, SAABs?
Does not Sweden still cling to the archaic concept of a draft ?
Are Swedish military personnel not currently deployed to such places as Afghanistan and Kosovo?
Thus in Sweden, I can live almost as well by not working as working.
IOW, an apparently otherwise intelligent young male, can live as a leech on the ass of everyone else, contributing nada. And brag about it.
The only reason you don't pay anything towards a military is because you don't have a job, and thus pay no taxes.
Yeah...that sounds like my kind of paradise.
I get free medical care.
"Free", only because you are a leech with no job, and pay no taxes.
And my country is free of racial tension because we have strictly limited immigration from trouble makers.
IOW...instead of allowing immigration, and possibly helping some poor slob who wants a better life, you selfishly keep your 'paradise' for yourselves. Must maintain that Nordic racial purity. Keep out anyone you don't like the looks of.
Basically this is a tax on large multimational corporations. So that makes small companies more competitive. What's not to like?
AOL, eBay, etc have to comply because they have operations in the EU. Small companies, located entirely in the US can safely ignore anything the EU says because their laws don't leave their borders any more than a US law can apply to a company in the EU.
This is just a larger version of the fun we get inside the US with sales tax. Buy from a small outfit and you don't pay sales tax unless you are unlucky enough to be in the same state. Which, btw, is why so many mailorder/online retailers avoid establishing operations in high population states.
Democrat delenda est