App Store and iTunes Prices in UK May Increase Up to 20%

[JoEw]

I pay national insurance for the national healthcare, has nothing to do with Apple's prices. Not sure if the 20% tax goes on the entitlement system as I have to pay for that with my income tax every pay cheque.

I also pay into social security and medicaid and medicare with every pay check, and guess what? I still have to pay for my own health insurance (my job does not pay for all of it). I am just pointing out the difference is your 20% VAT goes to the government to supply you with a service, where mine goes to a company to take a share of the profit to supply me the service.

 

[Inhalant]

I believe in taxes, but 20% for everybody? Really?

Do they know about progressive taxation? Poor Brits.

 

[Rafterman]

Where in New York are you because I remember paying sales tax on Amazon purchases since '07, which is why I stopped using them.

Buffalo. The law actually passed in 2008, so me saying "a while back" is probably a bit misleading. But I think the legal challenge to it was finally thrown out "a while back", in the last year or two. Of course, big surprise that state courts would side with the state when it comes to collecting taxes.

I still use Amazon because I have to pay taxes anyways now, and their shipping is still the best.

 

[apolloa]

I also pay into social security and medicaid and medicare with every pay check, and guess what? I still have to pay for my own health insurance (my job does not pay for all of it). I am just pointing out the difference is your 20% VAT goes to the government to supply you with a service, where mine goes to a company to take a share of the profit to supply me the service.

And in the UK despite the NHS I still ensure I have private cover, although it's from my employer. I do contribute to it from my pay cheque though. If you need something other than an emergency then you get treated quicker going private.
But it's a damn site better than the American system, never understood how you got like that with your healthcare?

 

[CrazyForApple]

You just get to go bankrupt if you get health problems and don't have health insurance instead.....

Look, we all know the U.S. is the best country in the world. I would rather be homeless in the U.S. than rich in the U.K.

 

[gnasher729]

Actually, it's all to do with Apples earnings.. If they weren't earning above £79,000 (I think!) then they wouldn't need to pay VAT and wouldn't need to register for VAT. It's up to Apple, not the consumer.

Just to clarify: £79,000 revenue, not profit

 

[Tubamajuba]

If corporations had to absorb all sales taxes, socialist countries with high sales taxes would be advantaged compared to the more capitalist ones.

If this was the case, why would any country not turn super-socialist and make every public service free and put 50% sales taxes on everything? It's corporations, not citizens, that would end up paying for that 50% anyway. Where do we set the bar? Apple and the likes would end up paying for your healthcare and infrastructures while it wouldn't in non-socialist countries. How is that fair?

In the end, you'd want corporations to be paying for basically all of your government's expenses, except that in reality it wouldn't be sustainable for them to do so, so they'd just stop making business in your country.

And I say that as a Canadian who pays an extra 15% sales tax on top of every product that's already more expensive than in the states. Your proposition just seems incredibly naive and selfish. I'm by no mean knowledgable about economics or politics but this kind of post (and its number of upvotes) is so cringeworthy it makes me feel better about the little understanding I have.

Thank you so much... too many people don't seem to understand how the economy works.

 

[cymerc]

I suspect we would riot in the streets if they increased tax to 40% and I am NOT joking on that. We would literally have a civil uprising. So that is what is stopping them.
And I agree, Apple should absorb the increase, they have made enough billions by dodging the UK taxes they had a duty to pay by exploiting loopholes. They are not the only ones either.

No you wouldn't. You obviously expect companies to absorb the tax for you so how would you even know if the tax were 40%? Raising the tax wouldn't even affect you at all. THAT is why Apple doesn't simply absorb it.

 

[apolloa]

I believe in taxes, but 20% for everybody? Really?

Do they know about progressive taxation? Poor Brits.

Yes, it was 16% only a few years ago, if I remember it wasn't going to be 20% forever.. still waiting. Plus the price of fuel is stupid and food is going up in price, although that's partly due to hedge fund companies and the financial giants betting and trading on the food markets, making the lows lower and highs higher to make more profit.

meh going of topic now and some mod will only tell me off..

Anyway, they should all be paying their taxes as required.

----------

No you wouldn't. You obviously expect companies to absorb the tax for you so how would you even know if the tax were 40%? Raising the tax wouldn't even affect you at all. THAT is why Apple doesn't simply absorb it.

eh? You got confused mate, we are talking VAT I believe, and we pay VAT on pretty much every single thing we buy, so yes, doubling what we pay now which is 20% would have a rather sharp response from the public, it would put most into poverty.

20% more on fuel
20% more on goods
20% more on food
20% more on energy

Pretty much your entire outlay would increase by 20% just to live. But your earnings will not increase by 20%

 

[The Doctor11]

Well that sucks... US. Please don't get any ideas.

 

[cymerc]

Yes, it was 16% only a few years ago, if I remember it wasn't going to be 20% forever.. still waiting. Plus the price of fuel is stupid and food is going up in price, although that's partly due to hedge fund companies and the financial giants betting and trading on the food markets, making the lows lower and highs higher to make more profit.

meh going of topic now and some mod will only tell me off..

Anyway, they should all be paying their taxes as required.

----------



eh? You got confused mate, we are talking VAT I believe, and we pay VAT on pretty much every single thing we buy, so yes, doubling what we pay now which is 20% would have a rather sharp response from the public, it would put most into poverty.

20% more on fuel
20% more on goods
20% more on food
20% more on energy

Pretty much your entire outlay would increase by 20% just to live. But your earnings will not increase by 20%

ok, so if you pay it on everything (I admit, I'm not super familiar with the VAT) why not on apps too? Why is everyone pissed that Apple doesn't absorb it when nobody else obviously does?

 

[throttlemeister]

Look, we all know the U.S. is the best country in the world. I would rather be homeless in the U.S. than rich in the U.K.

With this concise reasoning and display of intelligence, I am surprise you aren't.

 

[Lukkee24]

Not sure what the point of taxing something in the UK that was created in the US and distributed by a US company... Just because the user happens to be sitting in the UK at the time of purchase. Digital things should not be bound to a location!

I'm pretty sure not all apps are made in the US . Apple decides to operate in the UK, therefore it should pay UK taxes.

 

[throttlemeister]

ok, so if you pay it on everything (I admit, I'm not super familiar with the VAT) why not on apps too? Why is everyone pissed that Apple doesn't absorb it when nobody else obviously does?

I don't think it's the Europeans making these absurd remarks. VAT = sales tax. Apple doesn't pay it, the customer is.

Also, EU law says that if you buy products from inside the EU, you pay VAT in the country of purchase.

If the UK wants to do otherwise, tough luck, it ain't happening. Unless they manage to convince the rest of the EU to change European regulations. Which is not going to happen overnight and will introduce huge cost for both companies and governments to administer.

 

[kd5jos]

Apple should simply ****ing absorb the VAT. It's not as if they did not already profit enough from those tax leaks and make quite some money anyway.

You wanna make money in a certain country? Pay this country's taxes.
Just ridiculous to pay taxes in Luxembourg or Ireland but sell goods and services in a completely different country?

You want the luxury of being able to buy/use Apple products, pay the tax yourself.

See how that argument is equally logical both ways? Why do you get to dictate the upper limit of income for another company? Who made you the decision maker? Your choice is simple, buy Apple products for the price they charge, or don't.

 

[bbfc]

It's reassuring to know that wherever you are in the world you can still get hold of the Daily Mail.

This comment has made my night!

 

[roadbloc]

Gutted.

 

[Lukkee24]

I believe in taxes, but 20% for everybody? Really?

Do they know about progressive taxation? Poor Brits.

It'd be difficult to essentially charge different prices to different people for the same good, because of a different VAT rate dependent on a persons income. Other taxes such as Income Tax aren't flat line.

 

[swajames]

I'm not sure how that is compliant with EU law.

Value Added Tax or Retail Tax is always paid in the state of purchase for goods. If I buy a suit from Italy I pay Italian tax on my purchase. If I buy a CD from Estonia I pay Estonian tax and if I buy some music from Luxembourg I am paying Luxembourg tax.

If I am therefore paying tax in the country of purchase as the law states.

if VAT wasn't so high in the UK due to the policy of low direct tax and high indirect tax, companies wouldn't want to sell goods in the state with the lowest consumer tax which only benefits us as consumers.

If Osborne and Cameron think they can get a change in the law here they may have a tough fight as the EU Parliament elections are this year and the other state leaders may not be willing to see money flow out of their country towards the place of the end user instead of the purchase.

Perhaps the Cameron regime would be better to look again at the Commision proposal to eventually harmonise VAT levels across the Union. That way there would be less incentive to set up a business in another state.

1) This change is not UK-specific. It is part of the EU wide VAT package which, since 2010, has been gradually changing the place of supply and other rules. It impacts all member states. The change announced here is simply the UK implementing the change already required by the EU and already agreed by the member states. VAT legislation in the EU is based on the prime VAT directives ( itself an update to the old Sixth Directive) and EU law has priority over national law in matters of indirect taxation. All the UK is do is implementing changes required by the EU. Changes which were, incidentally, specifically intended to take away rate shopping on certain services. To your first point, it is compliant with EU law - because the change is mandated by EU law

2) Your Italian vendor example is subject to distance selling rules. Once a relatively low threshold is breached, your Italian vendor is required to register and account for local VAT in any member state where the threshold is breached. Rules such as those which will apply to services already anticipate and deal with this.

3). The UK VAT is actually about average. It's lower than many other member states. Only Germany, Cyprus, Luxembourg and Malta have a standard rate of VAT lower than the UK.

 

[iSRS]

It would be absolutely bunkers if that happened. I agree with you that surely Apple should never do that.

Another way they could do this is to pay 70% of the ex-VAT sum. This essentially means that if the digital content were £1, and:

1. VAT is 5%, the app writer gets 66.67p, Apple gets 28.57p, and the government get 4.76p.

2. VAT is 20%, the app writer gets 58.33p, Apple gets 25p, and the government gets 16.67p.

3. Even in bizzaro world where VAT is 40%, the app writer gets 50p, Apple gets 21.43p, and the government gets 28.57p.

It's worth noting that quite strangely, items selling for $1 on the US Apple Store cost 69p, in the UK Apple Store, which about $1.15, which already is a 15% 'charge' above US prices.

That last paragraph. Do we know Apple doesn't already pay that 15% VAT then? Or that this is what the charge is? Didn't someone state that Luxembourg is 15% and the 3% is eBooks only?

Assuming that this is true, I would anticipate a 5% increase next year, not 20%.

And I know my home state, the Commonwealth of Massachusetts, you pay the state tax on digital purchases.

 

[fixmymac]

Yes I know, that's what I said. However over the past four years Osborne has made a number of budget statements about things which has been forgotten or ignored because he found legally he couldn't do it. This is one of those probably worth flagging to the local MEP to look into.

Osborne and Tory Governments will soon be irrelevant where I live

 

[swajames]

US pricing is tax exclusive, UK/EU pricing is VAT inclusive. Whatever VAT rate is currently applicable to a UK iTunes purchase is already embedded into the price. In the US, if you buy from the store any applicable taxes are levied in addition.

 

[writingdevil]

Apple should simply ****ing absorb the VAT. It's not as if they did not already profit enough from those tax leaks and make quite some money anyway./QUOTE]

Possibly the most naive solution on this site today. Apple (or any company) should sell their product and pay your tax on it as well????? Walk into any BoD meeting in any corporation or single owner business and tell them they should pay your tax for their product??? And then add "...you're already making enough profit, in my opinion, so, yeah, pay up, you think I want to?"


On second thought, don't do that and don't get near control of a business for the future of your enterprise.

 

[thekev]

Don't feel bad, UK. Many here in the US know your pain. I live in New York State, which a while back instituted the "Amazon tax", making us one of the few states that actually taxes Amazon purchases. New York - the state that never met a tax it didn't love.

The way it worked made little sense. Sales tax rates are something that should be managed by percentage, not whether you have to pay them at all due to the ways companies choose to register their sales offices. Your complaints should be directed at the rates, not whether you can evade them (and yes it is technically evasion if you look up how NY law is written, same thing in CA).

 

[shinji]

You wanna make money in a certain country? Pay this country's taxes.

You wanna buy products in a certain country? Pay this country's consumption tax.

The original deal was intended to save buyers money on digital downloads. The problem should be with the UK government for crashing the party, not Apple.