Britain INCREASES tax on ebooks

[HarryT]

Originally Posted by Cookie Monster

Its not exactly a crippling tax increase. An ebook that costs £20 will increase to £20.43 in January.

Prices will rise by 2.1%. As you say, not exactly crippling.

[GeoffC]

The 'usuals' cigarettes, alcohol & fuel have not gone up (this time round). There remains a 0% or 5% VAT on life's necessities - general food, domestic heating etc ....

I don't think we truely know the scale of the finances, but I would doubt the cuts & increases are based on a 'whim' ....

[HarryT]

Originally Posted by GeoffC

The 'usuals' cigarettes, alcohol & fuel have not gone up (this time round). There remains a 0% or 5% VAT on life's necessities - general food, domestic heating etc ....

There was an interesting item on this morning's BBC Breakfast about what attracts VAT and what doesn't. It's not as simple as one might think. Eg, plain digestive biscuits are exempt from VAT as food, but chocolate digestives are not, because putting the chocolate on "adds value", and hence makes them liable for VAT. Similarly oranges are exempt, but squashing the oranges to extract the juice again adds value, so orange juice is subject to VAT.

[GeoffC]

Originally Posted by HarryT

There was an interesting item on this morning's BBC Breakfast about what attracts VAT and what doesn't. It's not as simple as one might think. Eg, plain digestive biscuits are exempt from VAT as food, but chocolate digestives are not, because putting the chocolate on "adds value", and hence makes them liable for VAT. Similarly oranges are exempt, but squashing the oranges to extract the juice again adds value, so orange juice is subject to VAT.

I know - it must be a nightmare to manage.

[mr ploppy]

Originally Posted by HarryT

There was an interesting item on this morning's BBC Breakfast about what attracts VAT and what doesn't. It's not as simple as one might think. Eg, plain digestive biscuits are exempt from VAT as food, but chocolate digestives are not, because putting the chocolate on "adds value", and hence makes them liable for VAT. Similarly oranges are exempt, but squashing the oranges to extract the juice again adds value, so orange juice is subject to VAT.

But an ebook takes away value by having restrictions on what you can do when you've read it, so shouldn't they be 20% cheaper than a real book?

[GeoffC]

Originally Posted by mr ploppy

But an ebook takes away value by having restrictions on what you can do when you've read it, so shouldn't they be 20% cheaper than a real book?

i think the "value" you are referring to is not one that VAT would take into account ....

[kacir]

Originally Posted by HarryT

Eg, plain digestive biscuits are exempt from VAT as food, but chocolate digestives are not, because putting the chocolate on "adds value", and hence makes them liable for VAT. Similarly oranges are exempt, but squashing the oranges to extract the juice again adds value, so orange juice is subject to VAT.

It must be great fun to be a small store owner.
Even greater fun to be a bookkeeper and person responsible for working out how much VAT you are supposed to pay.

I am also sure that this will inspire some very inventive categorization / naming of food products by producers ;-)

[astra]

Originally Posted by omk3

sure, but it makes no sense to not reclassify them as books, because that's what they are after all, digital or not.

It makes no sense to call eBook Reader some f...oreign word in your signature, however, you do it. Why do you expect government to be any more sensible? People are the same everywhere.

[kjk]

Originally Posted by mr ploppy

But an ebook takes away value by having restrictions on what you can do when you've read it, so shouldn't they be 20% cheaper than a real book?

Maybe it depends who gets the "value add" :P

[J. Strnad]

But...but...a biscuit of any kind is value added to flour and water, isn't it?

Under Mr Ploppy's reasoning, a DRMed ebook would be VAT-free but a DRM-free book would be taxed.

My head hurts.

Basically, the government is looking for a way to raise revenue, so it does what governments do best, it taxes something, makes up a rationale for taxing that particular thing, and if the public doesn't rebel, the tax goes through. It starts low and gets higher (funny how rarely it goes the other way).

Now we are in the weird world of political logic, where you have to interpret the world in terms of the tax structure you've created.

Which is how sensible people end up discussing when "value" has been "added" to a product. Doesn't it add value to an egg to get it out from under a chicken, wash it off, and put it in a protective container? Does it really add value to a product to process the vitamins and nutrients out of it, pump it full of additives and corn syrup, and coat it with chocolate?

Somehow books got exempted. The government has no financial interest in exempting more book-like products, so ebooks get taxed. Books get exempted because of "educational value," but where exactly is the educational value in...well, I don't want to insult anyone's reading choices, but you can fill in the blank. Meanwhile, a truly educational ebook gets taxed because it's not a book, really, until the people rebel and insist on calling it a book.

It's nonsense, but that doesn't matter. It's the government figuring out how to raise revenue...end of story. If they decided to tax purple things, we'd have people arguing about whether something was bluish/reddish and nontaxable or truly purple and taxable. And eggplant farmers would lobby for an exemption.

[HarryT]

Originally Posted by J. Strnad

Basically, the government is looking for a way to raise revenue, so it does what governments do best, it taxes something, makes up a rationale for taxing that particular thing, and if the public doesn't rebel, the tax goes through. It starts low and gets higher (funny how rarely it goes the other way).

You have a rather short memory. We've just had a year in which VAT was reduced from 17.5% to 15%.

[J. Strnad]

It's not a memory problem, Harry, it's just simple ignorance. I didn't know that.

But tell me: How often does it go up, and how often does it go down, and what is the general trend?

We have ups and downs in our federal, state and local taxes, too, but the trend is clearly upwards.

Edited to add: Of course, the tax code is so complicated that it's hard to know. Usually somebody gets a break and somebody else has to take up the slack.

[HarryT]

Originally Posted by J. Strnad

It's not a memory problem, Harry, it's just simple ignorance. I didn't know that.

But tell me: How often does it go up, and how often does it go down, and what is the general trend?

We have ups and downs in our federal, state and local taxes, too, but the trend is clearly upwards.

Edited to add: Of course, the tax code is so complicated that it's hard to know. Usually somebody gets a break and somebody else has to take up the slack.

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%.

[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?

[omk3]

All places charge differently if you sit in or take away. I always thought it was because they charge you for the room, the table, the washing-up etc. I didn't know it was because of VAT.