Britain INCREASES tax on ebooks

[mr ploppy]

Or they can use their influence to have building projects stopped, which costs developers a lot of money and loses a lot of people their jobs.

[joblack]

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%.

In Germany e-books are taxed with the old VAT value (means 16%). Your luck that e-books are a virtual item and you can buy them anyway.

Evil guys could give 'Fidji Islands' as address country to save the VAT completely .

[K-Thom]

In Germany 19% VAT are added, not 16.

[jbjb]

Originally Posted by mr ploppy

Or they can use their influence to have building projects stopped, which costs developers a lot of money and loses a lot of people their jobs.

Wealthy people will always have influence. What does that have to do with the right level of taxation?

Of course, in the absence of wealthy people trying to make more money, those building projects would likely not exist in the first place.

/JB

[Xenophon]

Originally Posted by MovieBird

I'm curious, in the US you're only allowed to apply $3,000 in losses each tax year. A common practice is to "tax loss harvest". Let's say you invested $100,000 in the S&P 500 index fund, which dropped 12%. You then sell your S&P 500 shares and immediately invest in another, somewhat similar fund, say a Total Market Fund. You've just "lost" $12,000 but because the new investment is very similar to the old investment, when the S&P 500 recovers 12% the new fund should recover a similar amount.

Now, you can only apply $3,000 of that "loss" each year, or over 4 years.
[SNIP]

That $3000 limit is for capital losses applied against ordinary income. You can always apply all long-term capital losses against long-term capital gains in the same year (and similarly for short-term).

Also, J. Strnad wrote: "I've never actually seen a tax rate inhibit a wealthy person's desire to make money, btw."

It's not about inhibiting their desire to make money, but rather about the marginal effect on the particular methods they use. At relatively lower tax rates, there's not much point in worrying about how to game the system (a.k.a. find tax "loopholes"), so they just get on with making money. At relatively higher rates, non-productive "investments" that "just happen" to avoid some or all of the income tax look more attractive, so they replace some part of the productive investment (or work, or whatever) that would otherwise have taken place. Such replacement activities act (at the margin) as a dead-weight loss to the economy.

Xenophon

[DawnFalcon]

That's an argument for simplification, not an argument for lower tax rates.

[Grumpyreader]

I'm probably going to be shot down in flames for the following but, here goes.

I agree with the 20% VAT on eBooks [GrumpyReader ducks].

I'm lucky enough to be able to read and I have a job (thanks to an education system funded by taxes). I can therefore afford to buy an eBook reader which, lets be honest, is aimed towards bibliophiles rather than the average tabloid paper reader.

Does an extra 20% on top of the purchase price hurt - of course. Can I afford it? Yes.

I'd rather pay an extra 20% on my eBooks and leave paper books VAT free, thus hopefully encouraging less avid readers to pick up something other than the National Enquirier...

[GeoffC]

But it is the principle that is unfair - not whether one can afford the difference.....They are both books, one from paper, and one's a set of 0&1's - telling a story or providing information ....

[HarryT]

Originally Posted by GeoffC

But it is the principle that is unfair - not whether one can afford the difference.....They are both books, one from paper, and one's a set of 0&1's - telling a story or providing information ....

You're right. Given the current climate of austerity, should paper books continue to be zero-rated?

[astra]

Originally Posted by HarryT

You're right. Given the current climate of austerity, should paper books continue to be zero-rated?

Why not to add another 40% VAT for cars and furniture?

[Kali Yuga]

Originally Posted by GeoffC

But it is the principle that is unfair...

And what principle is that? There is no particular reason I can discern for books (paper or electronic) to be zero-rated, aside from those used for educational purposes or subject to other known exemptions.

And "fairness" is largely a matter of perspective. E.g. why should ebooks receive an exemption, when other digital products like digital audio files, downloaded games and so forth not get an exemption?

[GeoffC]

Originally Posted by Kali Yuga

And what principle is that? There is no particular reason I can discern for books (paper or electronic) to be zero-rated, aside from those used for educational purposes or subject to other known exemptions.

And "fairness" is largely a matter of perspective. E.g. why should ebooks receive an exemption, when other digital products like digital audio files, downloaded games and so forth not get an exemption?

That they should be treated equally ....

[tompe]

Originally Posted by GeoffC

But it is the principle that is unfair - not whether one can afford the difference.....They are both books, one from paper, and one's a set of 0&1's - telling a story or providing information ....

Why is it unfair? Maybe to people with bad eye sight that cannot read paper books. But why is it unfair to people that can read both paper books and use ereaders?

I really do not understand all the fairness arguments that are so common in these forums. E.g. I have no idea of what a fair price of a book is.

[GeoffC]

Originally Posted by tompe

Why is it unfair? Maybe to people with bad eye sight that cannot read paper books. But why is it unfair to people that can read both paper books and use ereaders?

I really do not understand all the fairness arguments that are so common in these forums. E.g. I have no idea of what a fair price of a book is.

Hang on - we're discussing the difference in VAT rating for paper and electronic versions - surely they ought to be equally rated.

As for bad eye-sight, that's a different argument. In the UK if someone is that bad, then they can be classed as disabled and can thus argue for a reclaim on the VAT paid.

[tompe]

Originally Posted by GeoffC

That they should be treated equally ....

Why? I can think of reasonable arguments for both treating them equal and for not treating them equal.