Britain INCREASES tax on ebooks

[tneken]

Originally Posted by HarryT

This is a highly misleading announcement.

What has happened, in case anyone isn't aware, is that it today's budget the new government has announced that, from 4th Jan 2011, the VAT rate is going to rise from the current 17.5% to 20% (which is pretty much in line with the rest of the EU). Given that eBooks and audiobooks are subject to the standard rate of VAT, naturally they will also be charged VAT at 20%.

Well here in Denmark the VAt is 25% on everything (including biscuits, oranges and books) so lucky you. Thats why people sometimes drive 200km to shop in the stores just on the other side of the danish/german border

[mr ploppy]

Originally Posted by HarryT

Sorry; I didn't realize that you weren't in the UK yourself .

VAT has been 17.5% in the UK for many, many years. It was temporarily reduced to 15% last year as an economic stimulus, when we were in a recession, but that was only ever a short-term measure. This increase to 20% is part of a package by our new government to get rid of an enormous budget deficit. They aim to "balance the books" within 4 years, by cutting overall government spending by 25%.

Not really the place, but I can't really see how increasing VAT is going to make people buy more products so that the economy will get moving again. It is more likely to make people buy less.

[Fbone]

Is the VAT the same in England, Wales, Scotland, NI, Isle of Man, Channel Isles?

[HarryT]

Originally Posted by Roger Parkinson

I recall struggling with programming system to handle VAT in the UK many years ago. It was a nightmare. It was even a bit tricky being a customer sometimes (take away food, IIRC, wasn't subject but eat in food was so McDonalds had two price lists). When they introduced a similar tax here in NZ I worried but they basically said 'no exemptions'. It means books, food and all those other things you worry about poor people being able to afford all got more expensive, but it was/is simpler to manage and possibly meant some savings in compliance costs which (I hope) are passed on to customers.

Do McDonalds still have two price lists in the UK?

No. The VAT exemption on takeaway food was removed some years ago, as I recall. Same price now whether you eat in or take away.

[HarryT]

Originally Posted by Fbone

Is the VAT the same in England, Wales, Scotland, NI, Isle of Man, Channel Isles?

It's the same everywhere except the Channel Islands, which are not a part of the EU, and don't have VAT. I'm not sure about the Isle of Man; it has some funny tax laws, but I believe it has VAT; I'm sure that someone will correct me if I'm wrong.

[BVLarson]

My poor European readers are already annoyed with the $2 sur-charge Amazon tacks on, they are being abused. They actually E-mail me about it, like I can do anything about it. They pay $3 and I get 0.35 cents.

[HarryT]

Originally Posted by BVLarson

My poor European readers are already annoyed with the $2 sur-charge Amazon tacks on, they are being abused. They actually E-mail me about it, like I can do anything about it. They pay $3 and I get 0.35 cents.

It's simply a data roaming charge, and only applies in those countries where Amazon hasn't reached some sort of agreement with local telecoms operators. Amazon stopped charging the $2 to UK customers a couple of months ago, for example. It's not a European thing, but an "outside the USA" thing.

[obs20]

I never liked the VAT or sales tax as we call it here in the states. I feel these taxes are regressive and disproportionately affect lower income people. Income taxes are fairer. If you make money one year then you owe a tax. If you had a bad year then you get a break.

[GeoffC]

VAT was invented because very high sales taxes and tariffs encourage cheating and smuggling, according to Wikipedia ...

It is a direct tax on consumers, treats everyone "fairly", especially where some products are 0% or a few % rated. Businesses on the other hand are able to claim back the VAT charged during inter business transactions. Makes it a costly exercise to manage, I would think.

I, too, agree that income tax is a fairer way to tax the individual - your money is taxed only once, that way you have more money in your pocket and importantly you chose what to spend it on. Although the income tax rate would have to rise ..... !!!!

[Iphinome]

Originally Posted by GeoffC

VAT was invented because very high sales taxes and tariffs encourage cheating and smuggling, according to Wikipedia ...

It is a direct tax on consumers, treats everyone "fairly", especially where some products are 0% or a few % rated. Businesses on the other hand are able to claim back the VAT charged during inter business transactions. Makes it a costly exercise to manage, I would think.

I, too, agree that income tax is a fairer way to tax the individual - your money is taxed only once, that way you have more money in your pocket and importantly you chose what to spend it on. Although the income tax rate would have to rise ..... !!!!

What about capital gains taxes and estate taxes? Isn't it more desirable to tax money that isn't earned than money that is?

[GeoffC]

Originally Posted by Iphinome

What about capital gains taxes and estate taxes? Isn't it more desirable to tax money that isn't earned than money that is?

By estate tax, I assume you mean inheritance ? - Surely that has already been taxed ?

Capital gains, why should one not 'benefit' from a financial improvement ?

These extra taxes cost money to collect .... and currently are a bittie confusing ....

[Iphinome]

Originally Posted by GeoffC

By estate tax, I assume you mean inheritance ? - Surely that has already been taxed ?

Capital gains, why should one not 'benefit' from a financial improvement ?

These extra taxes cost money to collect .... and currently are a bittie confusing ....

They should benefit but why should that not be taxed? And why should gains from selling off assets that have appreciated or gains from inheritance not be taxed before income from labor which is presumed to have social benefit.

[GeoffC]

If I were to buy a Picasso for £10m (say) and in 2 years time it appreciates to £15m, I have gained £5m.
However if, in that 2 years, it depreciates to £5m, then I have lost £5m.....

Why should I be penalised for my asset gaining in value when I would not be compensated for a loss ? ...

[Iphinome]

Originally Posted by GeoffC

If I were to buy a Picasso for £10m (say) and in 2 years time it appreciates to £15m, I have gained £5m.
However if, in that 2 years, it depreciates to £5m, then I have lost £5m.....

Why should I be penalised for my asset gaining in value when I would not be compensated for a loss ? ...

well first off you wouldn't have lost anything unless you first sold it at a loss and second capital losses are tax deductible but I could ask the same question about income tax. If I don't work for a day but spend $5 on lunch I've lost 5 dollars but if I work and earn $5 why should I be penalized by having to pay taxes? Taxes are a fact of life so we have to ask what should be taxed and how much? Under the theory that tax money is used for the common good like for fire department then the less socially beneficial income should be taxed more than the more beneficial ones.

I'm under the assumption that earning income though some kind of labor is more beneficial than waiting for something to appreciate and then selling it. I'm under the assumption that inheritance money has less social benefit than earned money. So I would tax the earned money less than the unearned.

[GeoffC]

In my scenario I am assuming that after 2 years, I would sell ... capital gain losses are (as far as I understand it in the UK) not tax deductible, for me as an individual.