Hacker News Reader

Comment by gambiting | Hacker News Reader

In EU internet purchases were always taxed, and yet online-only competitors still manage to compete with brick-and-mortar stores very successfully. So this article is quite bollocks.

View on HN

Everything was taxed, equally (with a few exceptions like food). No wasted time figuring out which tax to use, keeping up with tax changes, arguing why the brick & mortar store has a 5% rate while the online shop has 10%, etc.

Over the pond it's the same for everybody. Doesn't seem so in the US.

I think you misunderstand. The proposed changes are simply to remove the tax exemption. State sales tax will apply to internet purchases, just like they do for mail order. The confusion comes from the weird sales tax systems in place. I live in Colorado where the sales tax rates change according to a maze of Byzantine laws.

The main thing the EU did to simplify that is require one set of VAT rules per country. They can differ. For example, Denmark charges VAT on books, while the UK doesn't. And, like with the proposed US legislation, it's based on destination: if you order from amazon.co.uk to a Danish address, you pay VAT based on Danish rules.

But what can't happen is a situation where Herning, Ishøj, and Copenhagen charge different rates for different products. That simplifies the system considerably.

With one additional part: VAT is paid on imports (on any package over a certain value).

Correct me if I'm wrong, but an import duty was not part of the sales tax bill.

This is not what VAT is. Import duty is separate. VAT is paid on EVERY step when the product is sold/resold. So the wholesaler pays VAT when buying a product from the manufacturer, then a local shop is paying VAT while buying the product from the wholesaler, and then the customer is paying VAT once again while purchasing the product. Oh,and if the value of the product is over a certain value, they need to pay VAT again if they want to resale the product to somebody else as well! So you end up paying VAT even several times in this chain from manufacturer to the customer.

Yes, I know what VAT is. The US does not have VAT, and would need either an import duty or a requirement that sales tax be paid on imports for the situation to be equivalent to the EU... and that is not part of the bill AFAIK.

While technically true, this is a bit misleading since VAT is often quoted as the total amount (say "15% VAT") and this is not what is charged at each step (as would happen with a pyramiding gross excise tax). Instead what happens is the VAT is split up and a portion of it is collected at each step.

Reply on news.ycombinator.com