Dr H
Call Me a Cab
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- 2,006
- Location
- Somerset, UK
The name's 'H'...Dr H... ;-)
That was YOU with "the Queen" then??? The other jumper, as it were?The name's 'H'...Dr H... ;-)
I'm sure that's the gloss ELC and Aero would put on it. But we're not talking 5% on 9.99 here -- we're talking about hundreds of pounds in undisclosed profit. That's hardly "a little more of their margin." And if ELC and Aero can't be profitable in the EU because of the VAT then they and other EU businesses should take that up with their respective governments rather than gouging foreign buyers for an undisclosed 20% overcharge.This is a result of the way VAT is buried in the price of the items in countries such as the UK and other EU countries. The retailer is actually not permitted to show the pre-VAT price and tax separately.
The 'Government's' argument is that the customer might mistake the pre VAT price for the price they pay and be drawn into a purchase and then end up with a surprise 20% bill.
The reality is that the retailer ends up paying VAT it out of their profit margin, because the natural 'market price' is what they sticker the item as and the Tax gets removed from that. This is especially evident when VAT gets increased incrementally. What normally happens is that items are priced at the natural market price ie £9.99. But if VAT is increased from, say. 10% to 15%, the actual price the customer pays usually does not increase by 5%. It is most likely to stay the same and the retailer swallows the extra tax.
So, what does that mean for US purchasers... technically you are paying tax you shouldn't have to. In reality, you are just helping out small businesses retain a little more of their margin rather than them losing it to the Taxman.
The bottom line is that it's unfair to expect foreign purchasers to pay more for the same product, especially when they don't even know they're doing it. It's discriminatory and unethical, and I'd say the exact same thing about an American company that engaged in the practice.
C'mon. "Extra"? There is no "extra." There is the retail price, and there is tax. If you order something from California, you will pay the retail price, without tax. I will pay the retail price, with tax. We both pay the same retail price and I, as a California resident, have to kick in to my state's treasury. If you get charged the retail price, plus tax, but the retailer keeps the tax, then you are getting gouged... particularly if you don't even know it's happening. One of the upsides of the US approach to sales tax (it's added on to the advertised retail price) is that there is transparency in what is being charged for each component of the transaction.That's the thing the foreign purchaser isn't paying any more than the domestic one. It's just that the extra isn't going to the government.
And American companies never charge significantly more for goods sold into the EU than they do in the US?
And you were able to object in the first scenario because you could see it happening in the transaction, yes? (Was it corrected or no?)In addition, one US based company attempted to charge me sales tax when I was ordering a jacket from the EU.... because I was paying with AMERICAN EXPRESS!!
And then there is another that boldfacedly charges "5 x US shipping" to "foreign" customers. (This means $100 for a jacket... when it costs them about $40 to ship to the UK).
US Customs assigns a duty to those parcels coming from Aero & Eastman and the carrier collects the Customs duty when the jacket is delivered. Sometimes the jacket parcel is delivered and down the road that customer receives a bill for the duty fees. Either way the customs folks get their due.
Sales tax? Levied by whom?
I will save Aero and ELC the trouble. All they have to do is divide the advertised price by 1.2 for each foreign sale. The result is the VAT-free price. Keep a copy of the invoice and the shipping/customs papers in case of an audit and presto! VAT-free foreign sales. ELC and Aero make the exact same margin they do on domestic sales (which they should be willing to do, seeing as how they are willing to sell in the US at a discount via HPA and, formerly, Mark Moye), and foreign customers are more inclined to buy from them due to the lower price. Seems like a win-win.Aero and Eastman probably need to look up the accounting software that can cope with removing the VAT for foreign sales with out adding to their overheads, if it does they could add a foreign orders processing fee surcharge.