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Old 02-01-2021, 10:32 AM   #121
paulsalter
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Originally Posted by Pajamaman View Post
I'm sure the retail price change would be "automatic" if the government increased VAT.
I am sure they would also

This is the part relating to what we are talking about, the first option is the one the publisher has selected for the book we are talking about

Retailers, who normally show VAT inclusive prices on price tags, will have two choices:

to leave prices at the pre-VAT reduction levels – this will increase their profits on items sold
or
reduce their prices – thereby passing on the VAT reduction to their customers.


https://totalaccounting.co.uk/what-h...s-are-changed/
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Old 02-01-2021, 12:04 PM   #122
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Originally Posted by Pajamaman View Post
No, that is incorrect. The publishers have increased their prices. The government dropped the price, and the publishers then increased the price to absorb the savings implemented by the government.
Thank you. That's exactly what I was trying to say.
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Old 02-01-2021, 12:09 PM   #123
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If I had a choice, I'd rather the VAT go to the government then into the pockets of the greedy publishers.
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Old 02-01-2021, 12:24 PM   #124
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Thank you. That's exactly what I was trying to say.
So now two people are wrong on the internet.
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Old 02-01-2021, 02:31 PM   #125
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So now two people are wrong on the internet.
Well there is also "By J.B. MAVERICK Reviewed By LEA D. URADU" who are at best confused.
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Old 02-01-2021, 02:36 PM   #126
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@Jon and @pajamaman

You are both misunderstanding how VAT works. You are conflating it with a sales tax.

Prices in the UK and Europe have to include VAT on the price sticker and companies are recommended to NOT show an ex VAT price.

To a retail customer the price on the sticker is the price you pay regardless of what the VAT is. On some items it's zero rated, some are 5% and the vast majority are 20% however to the consumer THIS DOES NOT MATTER.

VAT is paid all along the chain from manufacturer to consumer and by all of the middlemen along the way. Although the consumer is the one that ends up paying it in the end as far as they are concerned it's invisible.

Companies are under no obligation to reduce their prices if VAT changes (although a lot of them do), yes it's a crappy situation but that doesn't change the fact. The price on the sticker is the price you pay, end of. The company that sold it to you then has to pay any taxes required out of that price paid, it's all invisible to the consumer.

Again VAT is NOT a sales tax, it's a tax on value added at every point along the chain.

An example, milk is zero rated for VAT in the UK so buying a pint of milk attracts no VAT. Cheese however which is made from that milk has had value added to it by the process to change the milk in to cheese so it attracts a 20% VAT charge. If VAT was a sales tax then that tax would also be on the milk at point of sale, as it's a Value Added Tax it's not.

Again VAT is NOT a sales tax and you are confusing the two.

Is it confusing YES, is it wrong that companies don't pass on the change, morally probably, lawfully no.

It might seem like the companies have raised their prices due to the removal of VAT but they haven't as VAT is not a sales tax. Yes it's confusing but that doesn't make you any less wrong.

And as to the point of prices being automatically raised if VAT increases, they don't again the price on the sticker is the price paid, regardless of the VAT amount. Now that's not to say companies don't raise their prices if VAT increases because they do but it's not automatic like it would be if it was a sales tax. They would have to relabel all of the prices to increase them.

There's a fairly decent simple explanation here https://www.bbc.co.uk/news/explainers-53334098
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Old 02-01-2021, 03:01 PM   #127
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Quote:
Originally Posted by Mnementh View Post
It might seem like the companies have raised their prices due to the removal of VAT but they haven't as VAT is not a sales tax. Yes it's confusing but that doesn't make you any less wrong.
So the company that sold you a whatsit for £100 which included 20% VAT and is now selling you a whatsit for £100 with no VAT has not increased their price despite that difference of £20 in what the company gets to keep.

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And as to the point of prices being automatically raised if VAT increases, they don't again the price on the sticker is the price paid, regardless of the VAT amount. Now that's not to say companies don't raise their prices if VAT increases because they do but it's not automatic like it would be if it was a sales tax. They would have to relabel all of the prices to increase them.
Yawn. This endless attempt to claim that VAT is not a tax because the amount is not broken out is getting risible. As for a company not increasing prices with a VAT increase? One of my friends used to work in a lumber business in the UK for years handling their VAT damn near fell off her chair laughing at that suggestion. Her response was that the shelf price labels would be replaced the second the VAT increase took effect if not sooner as in 1979 while in 2008, it took them a couple of months to change their labelling for the VAT decrease.

It's not as if in most cases, the government suddenly comes out and says the VAT rate will be changing as of midnight tonight though the ebook VAT cut was brought forward 7 months from it's original implementation date.

Of course we all know that politicians don't always mean what they say but such quotes as when Oliver Dowden said (bolding mine) suggest that it was expected for the VAT relief to be passed on to the consumer:

Quote:
This tax relief on subscriptions to digital publications will boost our world-class publishers, save consumers money and reflects the surge in popularity of e-reading as we stay at home to protect the NHS.
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Old 02-01-2021, 03:13 PM   #128
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Quote:
Originally Posted by DNSB View Post
So the company that sold you a whatsit for £100 which included 20% VAT and is now selling you a whatsit for £100 with no VAT has not increased their price despite that difference of £20 in what the company gets to keep.

Correct, the price has not changed. The amount of tax the company you bought it from pays changes but the price you pay doesn't. I'm failing to see why this fact is so hard to grasp? This isn't aimed at you personally by the way I'm meaning in general.




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Yawn. This endless attempt to claim that VAT is not a tax because the amount is not broken out is getting risible.

Who's claiming VAT isn't a tax? It is a tax, what it isn't is a sales tax. This seems to be what most people are misunderstanding. A sales tax is only placed at the end of the chain where the item is sold, VAT is charged all along the chain.


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As for a company not increasing prices with a VAT increase? One of my friends used to work in a lumber business in the UK for years handling their VAT damn near fell off her chair laughing at that suggestion. Her response was that the shelf price labels would be replaced the second the VAT increase took effect if not sooner as in 1979 while in 2008, it took them a couple of months to change their labelling for the VAT decrease.

You didn't read what I wrote, you've just basically said the same thing I did, at no point did I say that companies wouldn't raise the prices, I said it's not automatic. You've basically just said the same thing "the shelf prices would be replaced instantly" (paraphrased) implying that the prices have to be changed manually... because they do, it's not automatic. Most if not all companies WOULD increase their prices because of a VAT change but it's a manual process.
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Old 02-01-2021, 03:51 PM   #129
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The difference between VAT and US sales tax is that VAT has to be included in the price. Sales tax is added at point of sale.

Both are a tax. If you reduce the tax to 0%, then the prices should be lower as you won't be paying this tax. How is it hard to believe that if you remove the tax, the price is lower. The fact that it's not lower is because the company decided to raise the price.
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Old 02-01-2021, 04:13 PM   #130
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Originally Posted by JSWolf View Post
The difference between VAT and US sales tax is that VAT has to be included in the price. Sales tax is added at point of sale.

No that isn't the difference VAT != Sales Tax


You are correct in that Sales Tax is added at the point of sale, and that VAT is included. The reason VAT is not added at the point of sale is because it's added all along the chain and even more confusingly can be different amounts at different points in the chain depending on what value you are adding and what tax rate that value attracts.


Lets just agree that Taxes are complicated and DIFFERENT in different countries and leave it at that.
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Old 02-01-2021, 04:15 PM   #131
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Originally Posted by JSWolf View Post
The difference between VAT and US sales tax is that VAT has to be included in the price. Sales tax is added at point of sale.

Both are a tax. If you reduce the tax to 0%, then the prices should be lower as you won't be paying this tax. How is it hard to believe that if you remove the tax, the price is lower. The fact that it's not lower is because the company decided to raise the price.
Because of the very real difference between should and is. What is so hard for you to understand about that?

https://en.wikipedia.org/wiki/Price
Quote:
A price is the (usually not negative) quantity of payment or compensation given by one party to another in return for one unit of goods or services.
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Old 02-01-2021, 04:52 PM   #132
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Who's claiming VAT isn't a tax? It is a tax, what it isn't is a sales tax. This seems to be what most people are misunderstanding. A sales tax is only placed at the end of the chain where the item is sold, VAT is charged all along the chain.
I hate to tell you this but the old Canadian Federal Sales Tax was not broken out in the final price exactly like the VAT but it was charged on every transaction from the manufacturer to the final consumer. Much like VAT, you remitted/collected the difference between what you paid out and collected. Now we have the Goods and Services Tax which is not hidden but the processes remain exactly the same though we now have forms for claiming back GST for a lot of different reasons. If you have a strong stomach, check forms such as GST 300-7-6 and it's swarm of cousins.

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You didn't read what I wrote, you've just basically said the same thing I did, at no point did I say that companies wouldn't raise the prices, I said it's not automatic. You've basically just said the same thing "the shelf prices would be replaced instantly" (paraphrased) implying that the prices have to be changed manually... because they do, it's not automatic. Most if not all companies WOULD increase their prices because of a VAT change but it's a manual process.
More that I am disagreeing with the implication that the average person is too stupid to realize that when the VAT on a product being sold for dropped from 20% to 0% on a product being sold for £100 and the price charged to them does not change, the seller is now collecting £100 instead of £83.33 so their profit has increased by £16.67.

As for changing the price manually, that would only happen in a B&M shop that is not using a computerized scanning system and there aren't many of those left in my area. Online shops and most B&M shops will change their pricing in the store's management computers. In this area, quite a few of the shelf price tags in B&M shops are also computer driven so a few milliseconds to change them. As long as the price at the cash register is lower than the marked shelf price, there is no issue.
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Old 02-01-2021, 05:29 PM   #133
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Would Amazon's 30% commission be calculated before or after the VAT?
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Old 02-01-2021, 05:35 PM   #134
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Originally Posted by JSWolf View Post
The difference between VAT and US sales tax is that VAT has to be included in the price. Sales tax is added at point of sale.

Both are a tax. If you reduce the tax to 0%, then the prices should be lower as you won't be paying this tax. How is it hard to believe that if you remove the tax, the price is lower. The fact that it's not lower is because the company decided to raise the price.
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No that isn't the difference VAT != Sales Tax

You are correct in that Sales Tax is added at the point of sale, and that VAT is included. The reason VAT is not added at the point of sale is because it's added all along the chain and even more confusingly can be different amounts at different points in the chain depending on what value you are adding and what tax rate that value attracts.
Sorry to disagree with both of you but the old Canadian Federal Sales Tax was not added at the point of sale but rather, like the UK VAT, was buried in the price charged at the point of sale. Once more, the tragedy in the slaying of a beautiful hypothesis by an ugly fact.
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Old 02-01-2021, 05:57 PM   #135
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Would Amazon's 30% commission be calculated before or after the VAT?
The VAT only works on the portion which added value, so the VAT came out of the 30% at the rate of 20% (for the 30%).Now instead of having to pay the VAT, Amazon gets to keep their whole 30%.

But then not sure if the contracts in the UK made sure that Amazon's profit margin was exactly 30% of sticker pricr regardless of VAT rate.
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