Amazon faces class-action lawsuit over eBook pricing

[JSWolf]

@murraypaul

Let me ask you this. Take a product that costs £3.99 including VAT. The government decides that this product should be sold without VAT. The company that makes the product does not alter the price in any way after the VAT is removed, what should the price be the the customer is going to be paying for this product now that there is no VAT?

[DiapDealer]

Originally Posted by JSWolf

what should the price be the the customer is going to be paying for this product now that there is no VAT?

WHATEVER THE SELLER WANTS TO CHARGE!!

[murraypaul]

Originally Posted by DiapDealer

WHATEVER THE SELLER WANTS TO CHARGE!!

This.

The seller hasn't worked out that £3.32 is the exact best price point for a book, then added on VAT to get to £3.99. They have decided that £3.99 is the best price point.

If people were willing to pay £3.99 for the book before, why wouldn't they be just as willing to pay £3.99 for it afterwards.

Let me ask you this. Take a product that costs £3.99 including VAT. The government decides that this product should be sold without VAT. The company that makes the product does not alter the price in any way after the VAT is removed, what should the price be the the customer is going to be paying for this product now that there is no VAT?

I'm not quite sure what you are asking? What should (morally) the price be changed to, or what the legal effect of the VAT rate changing.

If the VAT rate changes, and noone does anything, the customer will pay exactly the same price afterwards as they did before, all that changes is how much of that money the seller gets to keep. That is the difference between sales tax and VAT. The price that is printed on the box is the price you are charged, it is irrelevant what part of that ends up getting paid to the government in VAT.

For prices to be lowered requires a conscious choice on the part of the seller, if they do nothing, the price remains the same, regardless of an increase or decrease in VAT rate. If the company 'does not alter the price in any way', then the price remains the same, and the customer pays the same.

Amazon chose to immediately lower the prices of ebooks whose prices they set, to reflect the VAT change. Some publishers may have chosen to do the same, some might not.

To try to explain the difference.

Lets say we have two shops, one in the US, one in the UK, with pricing systems that instantaneously update to reflect any changes in sales tax/VAT.

In the US shop, you pick up an item priced at $10. You know that your sales tax is 10%, so you expect to be charged $11. As you are walking to the checkout, the sales tax rate is lowered to 5%, and you are actually only charged $10.50. 50c goes to the state in tax, $10 goes to the shop. You have been charged less than if the rate had stayed the same, the store has got the same amount either way.

In the UK shop, you pick up an item priced at £10. You know that the VAT rate is 10%, so you expect to be charged... £10, because that is the price of the item. As you are walking to the checkout, the VAT rate is lowered to 5%, and you are actually charged... £10, because that is the price of the item. 50p goes to the state in tax, £9.50 goes to the shop. You have been charged the same price as if the rate had stayed the same, the store has kept more.

In the US, the product is priced without sales tax, and the tax is added on at the till. This make some sense, as sales taxes can vary in different locations.

In the UK, the product is priced including VAT. This makes sense, as VAT is the same throughout the country.

[JSWolf]

Originally Posted by murraypaul

This.

The seller hasn't worked out that £3.32 is the exact best price point for a book, then added on VAT to get to £3.99. They have decided that £3.99 is the best price point.

£3.99 is the price with VAT. £3.32 is the price when VAT is removed. The publisher is not losing any money when there is no VAT. The publisher does not get to keep any of the VAT.

If people were willing to pay £3.99 for the book before, why wouldn't they be just as willing to pay £3.99 for it afterwards.

Because the eBook should not cost £3.99 any longer because it should be priced at £3.32 because VAT has been removed by the government in order to lower the price. This is done because a lot of people are not getting their full pay due to the virus and lockdown. This was not done to line the pockets of the publishers.

[paulsalter]

Originally Posted by JSWolf

£3.99 is the price with VAT. £3.32 is the price when VAT is removed. The publisher is not losing any money when there is no VAT. The publisher does not get to keep any of the VAT.

But it isnt, you still dont understand what VAT is, you keeping thinking there is a price for the book and VAT is added to that

The price is £3.99, doesnt matter if VAT is 20% or 0%, the price is £3.99

This £3.32 you keep mentioning is irrelevant

[JSWolf]

Originally Posted by paulsalter

But it isnt, you still dont understand what VAT is, you keeping thinking there is a price for the book and VAT is added to that

The price is £3.99, doesnt matter if VAT is 20% or 0%, the price is £3.99

This £3.32 you keep mentioning is irrelevant

Everything has a price and VAT is added to that. That is how it works.

£3.99 is the price WITH VAT. £3.32 is the price when VAT is removed. VAT has been removed by the UK government. So the price should be £3.32 because there is no need to collect VAT.

An item is not £3.99 with or without VAT. That's not how it works.

https://www.gov.uk/vat-businesses/in...clusive-prices

VAT-exclusive prices

To work out a price excluding the standard rate of VAT (20%) divide the price including VAT by 1.2.

When you have an item that has VAT ad the VAT has been removed, the price is lowered. Because the price is not lowered, that means that VAT-exclusive price has been raised to be the same as it would have been VAT-inclusive.

How can you not see this is how it is?

[DiapDealer]

Originally Posted by murraypaul

If people were willing to pay £3.99 for the book before, why wouldn't they be just as willing to pay £3.99 for it afterwards.

Probably for the same reason the world "entitled" appears in more and more advertising: people believe they're entitled to the same deal everyone else got. If Bob got the same model new car for 1000 dollars less than Alan at a different dealership, Alan's at his dealership ranting and raving about paying a price he was satisfied with paying just yesterday. So naturally, if someone could have sold them something cheaper because of a break the "manufacturer" got on costs, it becomes a crime if they don't, in fact, sell it to them cheaper. Never mind that savings like this have never been passed on to the consumer in the past.

3.99 was the price people were willing to pay before, and VAT (or lack thereof) makes no difference on the price they'll be willing to pay after. The pricepoint is the pricepoint is the pricepoint. Nobody is getting ripped off, nobody is doing anything illegal--or even unscrupulous (RE this VAT nonsense, mind you)--and that is why there's been little mention of it in mainstream media. Because it's not even remotely newsworthy.

[paulsalter]

Originally Posted by JSWolf

Everything has a price and VAT is added to that. That is how it works.

And here lies the exact problem

Until you can understand the basics of how VAT works, there is no point continuing

[JSWolf]

Originally Posted by DiapDealer

3.99 was the price people were willing to pay before, and VAT (or lack thereof) makes no difference on the price they'll be willing to pay after. The pricepoint is the pricepoint is the pricepoint. Nobody is getting ripped off, nobody is doing anything illegal--or even unscrupulous (RE this VAT nonsense, mind you)--and that is why there's been little mention of it in mainstream media. Because it's not even remotely newsworthy.

It isn't illegal, but it is unscrupulous. The UK government removed VAT on eMeidia to lower the prices. They did not do so to help line the big publisher's pockets.

[JSWolf]

Originally Posted by paulsalter

And here lies the exact problem

Until you can understand the basics of how VAT works, there is no point continuing

I understand how it works. Do you understand how it works.

So tell me, how can VAT on eBooks can be removed and the price sold remain the same if the VAT-exclusive price was not raised?

[murraypaul]

Originally Posted by JSWolf

Everything has a price and VAT is added to that. That is how it works.

No it isn't.

You have been told this many times, by different people, but you keep ignoring it.

You are walking into a native French speaker's house and telling them their pronunciation is wrong, even though you can't speak French.

From the very government page you quoted:

To work out a price excluding the standard rate of VAT (20%) divide the price including VAT by 1.2.

You start with the price, which includes VAT, and then work out the ex-VAT price by removing the VAT element. Not vice versa.

When you have an item that has VAT ad the VAT has been removed, the price is lowered. Because the price is not lowered, that means that VAT-exclusive price has been raised to be the same as it would have been VAT-inclusive.

How can you not see this is how it is?

Yes, the ex-VAT price has been raised. This is true because the ex-VAT price is derived from the actual price.

The actual price has not been raised.

£3.99 == £3.99

[murraypaul]

Originally Posted by JSWolf

So tell me, how can VAT on eBooks can be removed and the price sold remain the same if the VAT-exclusive price was not raised?

Have you finally realised you are wrong, and are trying to move the goalposts?

Yes, the ex-VAT price has changed, because the VAT rate has changed. The price has not changed.

[JSWolf]

Originally Posted by murraypaul

Have you finally realised you are wrong, and are trying to move the goalposts?

Yes, the ex-VAT price has changed, because the VAT rate has changed. The price has not changed.

You remove the VAT and the price becomes lower because you no longer have to charge VAT. Now you have a lower price. You want to sell the eBook for the same price as it was when VAT was included. So you RAISE the price to match what it was when VAT was included. If the VAT-exclusive price was not raised to match the VAT-inclusive price then the price the customer pays would be lower.

How does that not make sense to you?

[JSWolf]

Originally Posted by murraypaul

No it isn't.

You have been told this many times, by different people, but you keep ignoring it.

You are walking into a native French speaker's house and telling them their pronunciation is wrong, even though you can't speak French.

From the very government page you quoted:


You start with the price, which includes VAT, and then work out the ex-VAT price by removing the VAT element. Not vice versa.



Yes, the ex-VAT price has been raised. This is true because the ex-VAT price is derived from the actual price.

The actual price has not been raised.

£3.99 == £3.99

You make an eBook. You price it at a certain price. You have to add VAT to that price. Now you have two prices. You have a price without VAT and a price with VAT. Before the VAT removal, the shops charged the price with VAT. The government decided not to charge VAT on eBooks. So the price the customer should be paying is the original price that did not contain VAT. But because you decided you wanted to make more profit, you raised the original price to be the same as the price was when VAT was added.

That's how it works and that's what's happening. The original price has been raised.

[DiapDealer]

My god.