Amazon faces class-action lawsuit over eBook pricing

[paulsalter]

Originally Posted by JSWolf

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?

I do thanks, I live and buy products in the UK, so i know very well how these things affect me

[cfrizz]

Ok, I had to look this up to see what it actually entailed, and this is what I learned.

Link where I got the information.

https://www.investopedia.com/ask/ans...-added-tax.asp

Value-Added Tax (VAT) Examples

By J.B. MAVERICK
Reviewed By LEA D. URADU
Updated Dec 29, 2020

A value-added tax (VAT) is a consumption tax that is levied on a product repeatedly at every point of sale at which value has been added. That is, the tax is added when a raw materials producer sells a product to a factory, when the factory sells the finished product to a wholesaler, when the wholesaler sells it on to a retailer, and, finally, when the retailer sells it to the consumer who will use it.

Ultimately, the retail consumer pays the VAT. The buyer in each earlier stage of the product's production is reimbursed for the VAT by the subsequent buyer in the chain. VAT is commonly used in European countries. The U.S. does not utilize a VAT system.

VAT is commonly expressed as a percentage of the total cost. For example, if a product costs $100 and there is a 15% VAT, the consumer pays $115 to the merchant. The merchant keeps $100 and remits $15 to the government.

So if the price of the ebook was orginally 3.99 with 10% VAT added on, it would bring the price to 4.38 if the publisher decided to pass the price on to the customer. So if this is correct, we would pay 4.38, and the publisher would have to send the additional .39 to the government, keeping the orginal 3.99. But since the price was 3.99 with and now without the VAT, I guess that means the publisher decided to take the loss of .39, and kept the 3.60 remaining from the sale of the ebook.

[murraypaul]

Originally Posted by JSWolf

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.

No Jon, that isn't how it works, and it isn't what happened.

The original price that was set included VAT. When VAT was removed, the price remained the same. Until and unless the seller decided to reduce the price, the price will stay the same. That is how it works.

The original price includes VAT. That is a fact. You think it doesn't. You are wrong.

I'm going to leave this conversation. Multiple people who live in countries with VAT have told you that you are wrong. You are choosing to ignore all of them. I have explained it as well as I can, there is no point wasting time further.

[murraypaul]

Originally Posted by cfrizz

So if the price of the ebook was orginally 3.99 with 10% VAT added on, it would bring the price to 4.38

No. The price was £3.99. That included VAT. VAT is always included in the price quoted for consumer goods in VAT countries, there is not the concept of sticker price and till price being different that exists in countries with a sales tax.

[paulsalter]

Originally Posted by cfrizz

So if the price of the ebook was orginally 3.99 with 10% VAT added on, it would bring the price to 4.38 if the publisher decided to pass the price on to the customer. So if this is correct, we would pay 4.38, and the publisher would have to send the additional .39 to the government, keeping the orginal 3.99. But since the price was 3.99 with and now without the VAT, I guess that means the publisher decided to take the loss of .39, and kept the 3.60 remaining from the sale of the ebook.

This is where the confusion is, you are thinking how the US Sales Tax works

If the book is £3.99, then that is the selling price of the book, nothing extra is added onto it, it doesnt matter if the VAT is 0%, 10% or 20%, the price of the book is still £3.99, this is what we would pay

The publisher will have to pay whatever the percentage is of the VAT

The book price is static, changes to VAT do not automatically mean it goes up or down

[cfrizz]

So are you saying that the publishers/businesses simply make the price up to what they want it to be around the taxes they need to pay?

No, I'm basing my question on what I posted up top, which seems to contradict what you are saying.

https://www.investopedia.com/ask/ans...-added-tax.asp

Value-Added Tax (VAT) Examples

By J.B. MAVERICK
Reviewed By LEA D. URADU
Updated Dec 29, 2020

A value-added tax (VAT) is a consumption tax that is levied on a product repeatedly at every point of sale at which value has been added. That is, the tax is added when a raw materials producer sells a product to a factory, when the factory sells the finished product to a wholesaler, when the wholesaler sells it on to a retailer, and, finally, when the retailer sells it to the consumer who will use it.

Ultimately, the retail consumer pays the VAT. The buyer in each earlier stage of the product's production is reimbursed for the VAT by the subsequent buyer in the chain. VAT is commonly used in European countries. The U.S. does not utilize a VAT system.

VAT is commonly expressed as a percentage of the total cost. For example, if a product costs $100 and there is a 15% VAT, the consumer pays $115 to the merchant. The merchant keeps $100 and remits $15 to the government.

[paulsalter]

Originally Posted by cfrizz

So are you saying that the publishers/businesses simply make the price up to what they want it to be around the taxes they need to pay?

No, I'm basing my question on what I posted up top, which seems to contradict what you are saying.

https://www.investopedia.com/ask/ans...-added-tax.asp

Value-Added Tax (VAT) Examples

By J.B. MAVERICK
Reviewed By LEA D. URADU
Updated Dec 29, 2020

A value-added tax (VAT) is a consumption tax that is levied on a product repeatedly at every point of sale at which value has been added. That is, the tax is added when a raw materials producer sells a product to a factory, when the factory sells the finished product to a wholesaler, when the wholesaler sells it on to a retailer, and, finally, when the retailer sells it to the consumer who will use it.

Ultimately, the retail consumer pays the VAT. The buyer in each earlier stage of the product's production is reimbursed for the VAT by the subsequent buyer in the chain. VAT is commonly used in European countries. The U.S. does not utilize a VAT system.

VAT is commonly expressed as a percentage of the total cost. For example, if a product costs $100 and there is a 15% VAT, the consumer pays $115 to the merchant. The merchant keeps $100 and remits $15 to the government.

That is about the manufacture of goods, we are talking about sales direct to customer

Where did i say they make up prices?

[DNSB]

Originally Posted by cfrizz

is commonly expressed as a percentage of the total cost. For example, if a product costs $100 and there is a 15% VAT, the consumer pays $115 to the merchant. The merchant keeps $100 and remits $15 to the government.

Originally Posted by paulsalter

That is about the manufacture of goods, we are talking about sales direct to customer

@paulsalter: Did you bother to read the entire post before replying? Play special attention to the bolded sections in the quotes above.

[cfrizz]

Originally Posted by DNSB

@paulsalter: Did you bother to read the entire post before replying? Play special attention to the bolded sections in the quotes above.

Thank you DNSB! This is why I'm confused. If a tax is added, the price should go up, if removed then the price should go down. So I don't understand the price can stay the same whether the tax is added or taken away.

As for Amazon, they can only remove the VAT from their own publishing arm of their store and they said they were going to drop the prices on their books asap.

At any rate I don't really care about any of this, if I want the book I buy it regardless of what tax may or may not be added in. The govt. is going to get their share no matter what.

[JSWolf]

Originally Posted by murraypaul

No. The price was £3.99. That included VAT. VAT is always included in the price quoted for consumer goods in VAT countries, there is not the concept of sticker price and till price being different that exists in countries with a sales tax.

VAT is not included for eBooks any longer as the UK government has removed VAT from eBooks. So please show me where it says that a price that includes VAT will remain the same when VAT is no longer being charged by the government.

VAT is sales tax. The only difference is that it is included in the price and not added at checkout.

So please tell me why is it that the removal of VAT keeps the price exactly the same with the inclusion of VAT.

[DNSB]

My personal experience from when the Canadian Federal Sales Tax was removed as a hidden part of the retail price and became the Goods and Services Tax was that only the higher ticket items such as automobiles reduced the price to the consumer by the 5% of the old FST. Very few other vendors saw it as anything but a chance to add 5% to their profit margin. A few newspaper articles about it but a year later, no one seemed to care anymore.

[JSWolf]

Originally Posted by paulsalter

I do thanks, I live and buy products in the UK, so i know very well how these things affect me

And I've talked to others who also know about VAT. In fact, one of them used to work of Inland Revenue.

[JSWolf]

Originally Posted by murraypaul

No Jon, that isn't how it works, and it isn't what happened.

The original price that was set included VAT. When VAT was removed, the price remained the same. Until and unless the seller decided to reduce the price, the price will stay the same. That is how it works.

The original price includes VAT. That is a fact. You think it doesn't. You are wrong.

I'm going to leave this conversation. Multiple people who live in countries with VAT have told you that you are wrong. You are choosing to ignore all of them. I have explained it as well as I can, there is no point wasting time further.

Why do you think the price with VAT equals the same price when VAT is removed?

20% is added to the price. That money goes to the government. So when VAT is not added, the price is the price before VAT is added.

[JSWolf]

Originally Posted by cfrizz

Thank you DNSB! This is why I'm confused. If a tax is added, the price should go up, if removed then the price should go down. So I don't understand the price can stay the same whether the tax is added or taken away.

As for Amazon, they can only remove the VAT from their own publishing arm of their store and they said they were going to drop the prices on their books asap.

At any rate I don't really care about any of this, if I want the book I buy it regardless of what tax may or may not be added in. The govt. is going to get their share no matter what.

The only way the price stays the same when VAT is no longer being charged is for the company to raise the VAT-exclusive price.

[JSWolf]

Originally Posted by murraypaul

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

The actual price is the price is the price set BEFORE VAT is added. So if VAT is removed, the price become the actual price and not the actual price+VAT.