Aliexpress and ebay are now collecting sales tax - Page 1
Forum section: electronics / general

author: ataradov
author_rank: Super Contributor
timestamp: October 06, 2019, 02:51:07 am
content: It started this month, I believe. Ebay even sent me a letter (I'm a seller) saying that they will collect sales tax on my behalf.Now, I believe that eBay will actually send the tax to the sate. But how many of you think Aliexpress will bother to do the same, and not just pocket the money? Or pocket most of it using some creative accounting.This really sucks. I'm for paying taxes, but what exactly the state of California did in this case to deserve that payment?

author: sokoloff
author_rank: Super Contributor
timestamp: October 06, 2019, 02:55:53 am
content: I don't know maybe: sanitation, roads, education, public order, security/policing...

author: ataradov
author_rank: Super Contributor
timestamp: October 06, 2019, 02:58:19 am
content: Quote from: sokoloff on October 06, 2019, 02:55:53 amYes, but that comes out of the other taxes I already pay. Roads are paid for by the tax added to the gas purchase, for example.I understand the purpose of taxes. I just don't understand why it is applicable in this specific type of transaction.

author: beanflying
author_rank: Super Contributor
timestamp: October 06, 2019, 03:17:46 am
content: You can likely 'thank'our federal Government for giving California the idea. We had for a long time been exempt from paying GST on imports up to $1k AUD until our greedy government decided to slug nearly all imports with Tax and make the overseas sellers look after the costs of that collection.There is some out if the seller sells less than $X/year into Oz but that doesn't apply to evilbay, bangbad or aliexpress etc. for obvious reasons (trhink it was $60k/year?)There has been some positives come out of that. In order to try and keep competitive some of the Asian and in particular Chinese suppliers and even manufacturers have set up drop ship warehouses. What they do or do not do with 'tax' I have no idea but it has meant in some cases it is cheaper to buy in country than overseas and there is of course a time saving.Welcome to our world. And we won't mention our forced data encryption handover spreading like a virus elsewhere in the world either

author: Psi
author_rank: Super Contributor
timestamp: October 06, 2019, 03:34:42 am
content: When you buy stuff on aliexpress you aren't actually buying from aliexpress.You are buying from the 'seller' on aliexpress, with aliexpress themselves acting as an escrow service.So Aliexpress has no need to comply with AUS gst rules, they're not selling anything.It's the sellers on aliexpress that are required to comply with the AUS gst rules.And they wont have to comply if they send less than $60k USD of goods to AUS per year.AUS will track/enforce the system by scanning all mail entering the country to record it's value and it's originating address.If they see a company/address in china has sent over $60k into AUS in a year they will inform them that they need to register for AUS GST.If the don't AUS can block their packages until they do so.This wont work for two reasons.1) As we all know china values packages at like $5 or $10. So $60k worth is a lot of packages for a tiny china store at Shenzhen to ship to AUS.2) All they have to do is change their address periodically to avoid getting flagged by the system.EDIT: looks like i was kinda wrong, somehow Aliexpress is required to register for AUS gst. Not sure why.

author: beanflying
author_rank: Super Contributor
timestamp: October 06, 2019, 03:40:44 am
content: And yet here we are in the real world paying those taxeshttps://www.ebay.com.au/help/buying/paying-items/paying-tax-ebay-purchases?id=4771https://www.ato.gov.au/Business/International-tax-for-business/In-detail/GST-on-low-value-imported-goods/Information-for-operators-of-electronic-distribution-platforms/This seems to work ALL TO WELL.

author: CatalinaWOW
author_rank: Super Contributor
timestamp: October 06, 2019, 05:02:15 am
content: Governments always work things to their advantage. For example California believes that a California resident should pay California sales tax even if they drive into an adjacent state to buy an automobile. They refuse to register a new car until that sales tax has been paid. But at the same time they demand that an out of state purchaser pay California sales tax on cars sold in California, with one exception. If the car in question is shipped to its out of state destination without ever being driven off the dealer lot.There are only two rules I can see about taxation. One, governments always want more. Two, there is always an attempt to shift the tax burden to someone who cannot effectively complain. This is the source of all of those taxes on hotels, rental cars and airplane tickets. They apply to people who don't vote or have permanent legal standing in the jurisdiction where they are collected.

author: amyk
author_rank: Super Contributor
timestamp: October 06, 2019, 06:30:33 am
content: Quote from: ataradov on October 06, 2019, 02:51:07 amFor... causing cancer?

author: sleemanj
author_rank: Super Contributor
timestamp: October 06, 2019, 07:03:37 am
content: Quote from: Psi on October 06, 2019, 03:34:42 amBecause au does it the same way nz is going to from 1st december, aliexpress, ebay, amazon, even trademe are marketplaces and are deemed by the legislation to be the supplier for purposes of levying gst on low value imports.

author: Psi
author_rank: Super Contributor
timestamp: October 06, 2019, 07:23:28 am
content: Quote from: sleemanj on October 06, 2019, 07:03:37 amyeah, i just don't get how they would enforce it with aliexpress though.If you buy from Aliexpress the package you get comes from the seller and nothing on the package says Aliexpress anywhere on it.If AUS import agents can't detect if a package is from Aliexpress how can they enforce it?

author: sleemanj
author_rank: Super Contributor
timestamp: October 06, 2019, 07:31:41 am
content: Quote from: Psi on October 06, 2019, 07:23:28 amSame way virtual services (netflix, itunes, steam etc) are, honesty. the big players comply because getting offside with governments is usually a bad idea.

author: ataradov
author_rank: Super Contributor
timestamp: October 06, 2019, 07:33:41 am
content: That's why I'm saying that Ali will give them some money through some shifty accounting scheme. They were all to happy to implement this collection process.

author: sleemanj
author_rank: Super Contributor
timestamp: October 06, 2019, 09:07:44 am
content: Aliexpress is part of Aliababa Group, which is massively bigger than Aliexpress, shaving off some foreign tax dollars at the risk of getting caught through a sales tax audit and pissing off countries where you are trying to expand into (esp Alipay) is probably not worth it.In other words, Alibaba makes a shit ton of money, they don't need to do anything illegal!

author: Jwalling
author_rank: Unknown
timestamp: October 06, 2019, 09:21:03 am
content: Just started in MA on Oct 1st as well. I've already shelled out $80 or so.https://www.ebay.com/help/buying/paying-items/paying-tax-ebay-purchases?id=4771&st=12&pos=1&query=Paying%20tax%20on%20eBay%20purchases&intent=sales%20taxQuite a few states are already doing this now. With more to come as our greedy leaders always want more, more, more.It's only a matter of time before the rest follow suit.If you're a re-seller or business, you can file documents with Ebay to stop paying the tax. I remember reading somewhere that it may take up to two weeks for them to process.

author: soldar
author_rank: Super Contributor
timestamp: October 06, 2019, 10:31:20 am
content: I find the attitude of "eBay is American and therefore good and honest, Alibaba is Chinese and therefore liars and cheaters" extremely ignorant and prejudiced.Large foreign companies in any country generally expect to be closely watched and know local authorities would not condone in them what they might look the other way with local companies. Large foreign companies are generally extremely careful to abide by all laws and regulations because they know they would be easy targets. This is true in pretty much any country.Not to mention that in America large companies do not need to openly "cheat" as they can just support and lobby politicians and have laws and regulations suitably "adapted" to their needs and wishes.Huge corporations generally do not nickel and dime here and there because they don't need to and because they have better ways of making money.Many people have a negative view of big corporations and believe they cheat all they can but that would be foolish. Big corps need to be the ones most careful about following the law scrupulously because any disgruntled employee can blow the whistle any time. It is not the big corps that will cheat you, it is the small local run operations like the shop where they fix your car. They will tell you that you need a new discombobulator because the old one is shot and what are you going to do about it? It is a matter of trust and you are in their hands.

author: magic
author_rank: Super Contributor
timestamp: October 06, 2019, 02:09:41 pm
content: Quote from: ataradov on October 06, 2019, 02:51:07 amLet me guess, you probably live there or your buyers do and that's your/their entire faultAt least it's 9% rather than 23% like hereDunno about Aliexpress but if they are forced to collect taxes under threat of getting IP-banned or having their shipments seized I guess they will comply. And if not, they certainly won't pretend to collect taxes and then pocket the money. I can't even begin to imagine under what circumstances that could be a good ideaYour only hope is the trade war, perhaps. If the US can ban their companies from selling to China, so could China ban Ali from collecting taxes for foreign governments in order to force them to go more drastic and start confiscating shipments or doing other radical moves that could piss off American public and undermine their governments. But I doubt it happens, you are screwedDon't worry, I'm sure the same is coming to Europe soon.

author: SiliconWizard
author_rank: Super Contributor
timestamp: October 06, 2019, 03:41:31 pm
content: Well, eBay has already been collecting "import taxes" for goods coming from some countries (including, and especially the USA), and the amounts are just ridiculous. I practically never buy items from the US anymore due to that. Sigh.

author: ataradov
author_rank: Super Contributor
timestamp: October 06, 2019, 05:13:40 pm
content: Quote from: soldar on October 06, 2019, 10:31:20 amIt is not "eBay is American". It is eBay is easier to get by the balls, since they have office right here. IRS can go there and subpoena all of them. IRS has no way to even verify AliExpress sales numbers.Given the chance eBay will avoid those taxes as well.

author: soldar
author_rank: Super Contributor
timestamp: October 06, 2019, 05:29:59 pm
content: Quote from: ataradov on October 06, 2019, 05:13:40 pmAlibaba Group USA400 S El Camino Real #400,San Mateo, CA 94402,Phone: +1 408-785-5580They have physical, brick and mortar, stores in Spain. I'd be surprised to learn they have not opened in America yet.In any case, if they had absolutely no presence in America I cannot see how they could be taxed in America. That would be quite a novelty. Hey let's tax people in some other country!You can't do that. I guess you could start a trade war but even dummies know they backfire. Nah, nobody would think of doing that. Oh, wait...

author: magic
author_rank: Super Contributor
timestamp: October 06, 2019, 06:36:40 pm
content: It's not about taxing eBay and AliExpress but about taxing users of eBay and AliExpress and, specifically, forcing the platforms to collect the tax, as they are large entities easier to pressure and intimidate than millions of individuals who don't give a fuck.And if we were IRL I would readily bet $100 that you won't be able to order from China without paying VAT at the time of purchase by the end of 2029.

author: SiliconWizard
author_rank: Super Contributor
timestamp: October 06, 2019, 06:45:33 pm
content: Quote from: magic on October 06, 2019, 06:36:40 pmThat's quite possible and maybe even before that.Now if all customers will pay is VAT, that's fair enough. But if all those platforms take advantage of this to rip-off customers with indecent additional fees...VAT is an interesting case in a globalized world that claims to promote free trade at all costs.

author: magic
author_rank: Super Contributor
timestamp: October 06, 2019, 07:34:36 pm
content: That's certainly not a realistic option. But I'm saying that if people can order directly from China bypassing local taxes, they will.And in fact, if we started to declare every little $1 crap we buy, the government would lose more money processing all those payments than they are worth. The reason they aren't losing money every time somebody buys a loaf of bread is because it's the baker who is obliged to keep track of how much he sold and wire a collective payment from all the customers every month.So what I'm saying is that national governments around the world and international abominations like the EU must surely be salivating themselves to the though of having AliExpress send them monthly cheques for all the wares moving through their platform. And they will be figuring out ways to get there, such as putting $10 processing fee on every package from China to have it physically inspected by somebody for contraband.

author: soldar
author_rank: Super Contributor
timestamp: October 06, 2019, 08:23:24 pm
content: Quote from: Jwalling on October 06, 2019, 09:21:03 amI want to mention that VAT (Value Added Tax) is so far superior to Sales Taxes in every way that I do not understand how or why America has not switched over except that resistance to change that keeps the American system of measures from switching over to metric.

author: Zero999
author_rank: Super Contributor
timestamp: October 07, 2019, 09:59:47 am
content: Quote from: magic on October 06, 2019, 07:34:36 pmThey also try to prevent people dodging tax by ordering from China. Customs will often look at packages, add tax and pass it, along with administrative costs to the consumer.Bread and food items and exempt from tax in the UK and most counties, as far as I'm aware, so your baker example is not applicable, but yes it's true in principle: the seller has to do all the costly administration, so the government doesn't.The problem is the tax system is complicated. There are valid arguments for simplifying it, but then people find ways to avoid paying tax, so new laws have to be made, which complicates the system over time.

author: SiliconWizard
author_rank: Super Contributor
timestamp: October 07, 2019, 01:11:33 pm
content: Quote from: Zero999 on October 07, 2019, 09:59:47 amOf course. But this is a tricky matter, as I hinted above.By ordering from China (or from any other countries that have cheaper cost of labour and lower tax rates overall), you are already indirectly dodging tax (even if it's perfectly legal).Even with VAT, you're never going to fully compensate that. Conversely, VAT has a pretty different rate from country to country, so even paying VAT can yield unfair advantage (or OTOH, a tax level that could be seen as protectionism.)A real mess in this globalized world, and it's only beginning.

author: metrologist
author_rank: Super Contributor
timestamp: October 07, 2019, 01:29:07 pm
content: where does the money go if you live in a state that does not collect sales tax?

author: CatalinaWOW
author_rank: Super Contributor
timestamp: October 07, 2019, 02:29:20 pm
content: I live in such a state, and in a couple of transactions since the change I have not been charged. Which seems weird to me. I would have thought that the state where the seller operated would be the controlling factor and then any collections would go to the sellers state. The method chosen eliminates any business advantage non tax states have, but I think the legal tap dancing to make this happen must be impressive.

author: Pete66
author_rank: Regular Contributor
timestamp: October 07, 2019, 03:20:50 pm
content: I usually buy from Digikey / ebay /ali express.The problem I have with this is when I purchase with ebay or digikey they make it clear that I am paying tax and how much tax I am paying BEFORE i place my order.With Ali Express I did not even know I was paying tax until I noticed days later that I was charged more than the price of my order. Because of this I don't trust Ali Express any more.I will be buying from eBay and digikey from now on.

author: Red Squirrel
author_rank: Super Contributor
timestamp: October 07, 2019, 03:24:13 pm
content: I have mixed feelings on this. On one hand I think it's fair to charge tax as before you were at an advantage ordering online vs locally. Now it's a level field tax wise.But downside of this new law is it's much harder for a small guy to setup shop online as he needs to be setup to collect tax for every single jurisdiction. It can get very complicated to code that into your website if you don't want to outsource or use premade software. At least in Canada you only have to worry about that if you make over 30k in sales though so guess it's less of an issue for a hobbyist.

author: ataradov
author_rank: Super Contributor
timestamp: October 07, 2019, 04:27:40 pm
content: Quote from: Pete66 on October 07, 2019, 03:20:50 pmFor me AliExpress shows the tax before the order as a separate line item.

author: tszaboo
author_rank: Super Contributor
timestamp: October 07, 2019, 04:41:31 pm
content: Honestly, it is a good thing if they do this properly. I'm all for it.When I was buying larger purchases from aliexpress, I had to pay tax on it anyway. They slap on a " processing fee" on it, and I have to collect my package from the local bicycle shop* instead of my mailbox.You have to pay tax on items costing more than 23 EUR here, 21% tax. So if I buy something for 25 EUR, Then I pay now 25 EUR + 13 EUR fee + 5.25 EUR tax + half an our of my time.I would much prefer paying 25 EUR + 5.25 EUR.This is a good change.* not a joke

author: thm_w
author_rank: Super Contributor
timestamp: October 07, 2019, 10:28:15 pm
content: Quote from: Red Squirrel on October 07, 2019, 03:24:13 pmIt is more level, but they are just targeting the large sellers. You could still get away with buying through a smaller seller or directly from the vendor (I assume). I agree on the mixed feelings.Privacy defenders would go crazy, but another option could be charging at the credit card/payment level: If you spend x dollars on your credit card (or paypal/alipay/whatever) its taxed and goes directly to the goverment. This would almost completely level the field (other than for cash/crypto transactions, which you can never really avoid). And no more wasting everyones time collecting tax + fees at the door, filling out paperwork, etc as NAND says.

author: sokoloff
author_rank: Super Contributor
timestamp: October 07, 2019, 10:35:08 pm
content: Quote from: thm_w on October 07, 2019, 10:28:15 pmTowhichgovernment? If I use my credit card in state A with sales tax Ta, but live in state B with sales tax Tb, how much is my credit card dinged and to whom goes the money? Does it differ if what I bought in state A is a night in a hotel vs a car?

author: thm_w
author_rank: Super Contributor
timestamp: October 08, 2019, 12:40:33 am
content: Quote from: sokoloff on October 07, 2019, 10:35:08 pmGood point, the CC still knows where the purchase is made so it could be routed either all to A or to B when in B. Many ways to approach it, but I would be surprised if they can't match however the existing system works.

author: beanflying
author_rank: Super Contributor
timestamp: October 08, 2019, 12:48:17 am
content: And for those of us who still use cash to buy a coffee or small items how would CC tax collection work?At least those of us with Federal Taxes on goods makes it a much more simple job. That said being a free tax collector just adds more time to the life of small/micro business owners we don't have.In my part of my business as an example Milk has no tax but as soon as you do anything to it such as make a coffee with it you need to add tax on the combined beverage.Anyone with a functional brain try and follow this BS because I wouldn't even try.https://www.ato.gov.au/print-publications/gst-and-food/?page=10

author: Red Squirrel
author_rank: Super Contributor
timestamp: October 08, 2019, 01:42:27 am
content: The credit card thing could apply only to online transactions. It could be a flag (and other info such as type of items since not all items are taxed the same) the site sets to basically tell the credit card company that they are a retailer. That way it would not apply for things that are not taxed normally. It would go to the government of the credit card owner, as the tax is technically on the buyer, not the seller.Either way it's a nightmare for whoever has to code all of this. I say just do away with sales tax completely since we already pay enough through other avenues, but that's another story...

author: sokoloff
author_rank: Super Contributor
timestamp: October 08, 2019, 01:46:55 am
content: There are many things that are not taxed in my home state at the retail level: food ingredients (however prepared foods are taxed), clothing and footwear $175 or less. Without getting transaction line-item details (a further privacy violation), I don't see how you can implement taxation based on credit card receipts.

author: sleemanj
author_rank: Super Contributor
timestamp: October 08, 2019, 05:35:16 am
content: Quote from: beanflying on October 08, 2019, 12:48:17 amThankfully here in NZ when GST was introduced in 87 the powers that be saw that having silliness like that was no good for compliance.The only things really exempt here that most people come in contact with are financial services, and residential rent. We don't have all those crazy exemptions for "necessities" that AU UK etc have, despite occasional calls for "GST free fruit and veges" from nutbars who think that making a lettuce $1 instead of $1.15 is a) going to convince people to buy more lettuce and b) going to be the result of removing GST instead of the supermarkets just increasing the profit margin.

author: ivaylo
author_rank: Frequent Contributor
timestamp: October 08, 2019, 06:04:41 am
content: What is weird is how they charge ‘tax’ now on purchases from non-US eBay sellers. Until recently on larger purchases (not sure what the cutoff is) the shipper would charge me customs fee on behalf of US Customs. So that’s the federal government. A couple of weeks ago I bought something from a UK seller and got charged about 9% ‘tax’ in GBP, then something from China and got charged tax in USD. I assume that goes to the state of California? Haven’t bought anything bigger lately from eBay international, but can I end up paying both customs duty AND tax to CA? Mind you I’m all for playing by the rules, there are new moments here though...

author: metrologist
author_rank: Super Contributor
timestamp: October 08, 2019, 01:59:51 pm
content: Quote from: sokoloff on October 07, 2019, 10:35:08 pmI don't think you're buying a hotel night on Ali or eBay, but maybe a car from eBay. Cars are complicated because of licensing. But I'm not sure how they know where the purchase is made, such as if I'm visiting in another state and make online purchases. And food is not taxable in my state, but I think there are some cities that have an extra tax for some junk foods.Interesting about overseas purchases and something about import tariffs.I agree it's a mess, but some states were missing out on a lot of tax revenue, especially considering how these big online retailers have shattered and broken local retail markets. Soon, the only thing local will be services.

author: windsmurf
author_rank: Frequent Contributor
timestamp: October 08, 2019, 11:46:38 pm
content: Quote from: Red Squirrel on October 08, 2019, 01:42:27 amThere's a whole industry in existence to help you with managing your sales tax in real-time. We use Avalara for the home (U.S.) market.https://www.avalara.com/us/en/products/sales-and-use-tax.html

author: windsmurf
author_rank: Frequent Contributor
timestamp: October 09, 2019, 12:11:39 am
content: Quote from: ivaylo on October 08, 2019, 06:04:41 amIt's the buyer who gets charged tax by their resident state, which EBay collects for that state. It doesn't matter from whom the buyer purchases nor where the seller is located. So there's no more "buying from out of state to avoid your local state sales tax" any longer.

author: sokoloff
author_rank: Super Contributor
timestamp: October 09, 2019, 12:57:51 am
content: Quote from: windsmurf on October 09, 2019, 12:11:39 amI don't believe it's the state ofresidenceof the buyer, but rather the state in/to which the service/goods are delivered.If I, as a Massachusetts resident, order an Amazon package to be shipped to NC, I pay NC sales tax on that, not MA.Similarly, if I ship it to NH (or buy over the counter from a Best Buy), I pay NH sales tax (which is 0%). Then, if I import that into MA, I'm on the hook to pay MA a use tax, but Amazon / Best Buy is not a party to that obligation.

author: thermistor-guy
author_rank: Frequent Contributor
timestamp: October 09, 2019, 01:34:44 am
content: Quote from: sokoloff on October 09, 2019, 12:57:51 amYes, it should be based on shipping destination. When I order from Amazon with delivery to a freight forwarder in Oregon, no US state sales tax applies to that transaction, because OR has no sales tax. When the freight forwarder ships the item from Oregon to Australia, Australian Goods and Services Tax applies.If someone is charging you tax when it doesn't apply, you have a justifiable claim for reimbursement.

author: ivaylo
author_rank: Frequent Contributor
timestamp: October 09, 2019, 04:38:29 am
content: Quote from: windsmurf on October 09, 2019, 12:11:39 amOK, say I go to Paris and buy something expensive (a watch?). Go to the airport and claim my VAT back. Fly into my US state of residence and declare the item. Promptly I am charged customs duty. So far so good... Where do I go now to pay my state, municipal or whatever other tax and in what currency?

author: OwO
author_rank: Super Contributor
timestamp: October 09, 2019, 04:47:22 am
content: IMO most things shouldn't have sales tax. If you are taxing everything how is that any different than just printing money, other than penalizing cash flow and favoring stored value? It really should be a whitelist system where only luxury goods are taxed. Industrial goods, parts, and bulk goods should NEVER be taxed because added costs here get amplified as you move up the food chain and consumers simply see much higher prices. It used to be like this (and still is to some extent) in china where the vast majority of vendors evade sales tax. Currently all small-medium businesses still evade sales tax (VAT). I would go as far as to say this is one of the main reasons for china's advantage in the electronics industry.

author: soldar
author_rank: Super Contributor
timestamp: October 09, 2019, 07:13:31 am
content: Quote from: OwO on October 09, 2019, 04:47:22 amIn one short post you show that you know absolutely nothing about the different taxes, how they work, etc. You really should either study the topic a bit or keep your misinformed opinions to yourself.Once more:Quote

author: sokoloff
author_rank: Super Contributor
timestamp: October 09, 2019, 09:55:47 am
content: Quote from: ivaylo on October 09, 2019, 04:38:29 amIn MA, you can pay use tax with your state income tax return. It’s in USD.I leave as an exercise to the reader what percentage of use tax due is actually collected.

author: tszaboo
author_rank: Super Contributor
timestamp: October 09, 2019, 10:01:38 am
content: Quote from: OwO on October 09, 2019, 04:47:22 amYou probably dont understand how taxation works.B2B you dont pay VAT , B2C you pay VAT.

author: beanflying
author_rank: Super Contributor
timestamp: October 09, 2019, 10:13:20 am
content: And there is part of the problem with having this discussion not all taxes in all parts of the worldWe went from a wholesale sales tax where the tax was charged at the last point of wholesale (for applicable items) on that amount to a broad based consumption tax on EVERY sale for most items (still exceptions) at every exchange step but the amount paid to the prior link could be deducted from the governments take (very simplified but are you confused yet). It is like all systems the exclusions and exceptions that are the PITA.Wholesale or Retail Sales Taxes are different to Consumption Taxes are different around the world as are the names used.The result seems to be heading that same way however with cross border collection in particular with the rise of online sales it is likely to become universal.

author: soldar
author_rank: Super Contributor
timestamp: October 09, 2019, 10:42:29 am
content: Quote from: sokoloff on October 09, 2019, 09:55:47 amNot much of an exercise, is it?In Spain they decided small gifts and small sales are subject to tax. This in a country where corruption is rampant at the highest levels. Yes, if you sell a pair of shoes you don't use you are supposed to collect tax for the thieves in government. It is surreal.Tax collectors have showed up at weddings and seem perplexed that it would ruin the mood and the wedding.Maybe there is some country with more incompetent people in government but I cannot think of one.

author: SiliconWizard
author_rank: Super Contributor
timestamp: October 09, 2019, 03:24:51 pm
content: One funny use of VAT is applying it to second-hand goods, which doesn't make any sense from a "value added" POV IMO, but we still manage to pull that off.

author: CatalinaWOW
author_rank: Super Contributor
timestamp: October 09, 2019, 03:53:27 pm
content: Quote from: NANDBlog on October 09, 2019, 10:01:38 amYour simplified explanation clearly defines the obscurity of taxes. Big insurance business buys 1000 desktop computers. Is that a B2B or B2C? You say they are using them so in this case they are a customer and pay tax. But after a month they decide they want the latest model and sell all 1000. Was the previous transaction really B2B? Or was it not a sale at all, but a rental and taxed a different way?Other explanations I have seen of VAT says anytime you sell something for more than the cost of the contents you pay tax on that difference. But it always gets corrupted by exceptions, improvements and the like.

author: soldar
author_rank: Super Contributor
timestamp: October 09, 2019, 07:22:23 pm
content: Please, stop speculating as to how taxes work because they are painfully wrong and meaningless.Sales taxes and VAT are completely different in how they work and they are not difficult to understand. Just go to Wikipedia or some other place where they are explained. It is knowledge well worth having in the world we live in.I have never seen VAT apply to second hand items sold between private parties and it would make no sense to apply it. I would be interested in seeing a case.I am not an accountant but I now the basics of these taxes enough to see that all this is crazy speculation. Imagine the kind of explanation you would get about the difference between FET and bipolar transistors is you asked in an accounting board. Both are transistors, both amplify, ergo they are pretty much the same thing. Oh, and vacuum tubes too.

author: SiliconWizard
author_rank: Super Contributor
timestamp: October 09, 2019, 07:41:04 pm
content: Quote from: soldar on October 09, 2019, 07:22:23 pmOh really.First things first, so things don't get mixed up. An item sold by a "private" person (meaning, not a business) within the same country can't be sold with VAT, because a private person just can't collect VAT, new or second-hand. End of the story. But that covers only a small part of all sales.Two typical cases in which VAT is collected on second-hand goods:- Businesses selling them to private customers (you can try and twist the thing however you want to justify a resell of second-hand items by a professional adds value, but it's pretty hard to justify in general, and anyway, that would still mean that VAT has been paid several times on the same item, which is normally against the initial idea of VAT). Businesses selling anything have to collect VAT on sold goods (and services), new, second-hand, or even dead items- Businesses OR private persons selling them from another country: since the country of origin DOESN'T collect VAT in this case, but the country in which the goods are imported! (There are differences if it's strictly within the EU for instance, but from the US to Europe you definitely pay VAT with your own rate, whether the item is new or not! I have definitely paid VAT on second-hand items imported from the US. It's part of the custom fees, but part of them are definitely VAT on the declared value.

author: soldar
author_rank: Super Contributor
timestamp: October 09, 2019, 08:13:58 pm
content: Quote from: SiliconWizard on October 09, 2019, 07:41:04 pmSo we are saying exactly the same thing.Quote from: SiliconWizard on October 09, 2019, 07:41:04 pmA business is a business and there is no difference between new and second hand. They make money buying low and selling high. You can argue that the store did not add value to the bar of soap they sold you but from an economic consideration they did, they added their expenses and costs as a business. They added value when they sold it to you.Interpreting "Value Added" too strictly or literally does not help. The tax applies to what the law says it applies. And pretty much anything can be said to be "second hand" or "new" depending on your definition. I do not see any apparent contradiction in the law. Maybe because I used to work with things like this and fell into that frame of mind.Still, in Spain, businesses that deal in used goods have a special regime to account for the fact that they cannot deduct the VAT they did not pay in the first place. Yes, the tax codes can get complicated but this is because life is complicated.VATis one of the great inventions of modern times and it is surprising to me that it ever caught on because it looks a bit complicated at first and governments and bureaucrats run away from such things. America is an obvious case. But the advantages of VAT are so huge compared to other taxes that it should be implemented everywhere. I remember the mess that was the tax system in Spain before VAT was introduced. America's sales tax system is woefully outdated. It is the only advanced country in the world without VAT.https://en.wikipedia.org/wiki/File:Countries_with_VAT.svg

author: SiliconWizard
author_rank: Super Contributor
timestamp: October 09, 2019, 09:08:27 pm
content: I'll pass on this weird apologia for taxes in general and VAT in particular. Are you a politician?Anyway, I think you still missed the point I was making. A reseller doesn't make their customers pay VAT because they add value, they make them pay VAT because this is just how VAT is collected. They do it on behalf of the whole chain from design to manufacturing to everything up to the end sale. Since the customer pays VAT on the whole price of the goods, we can consider that the margin of the reseller reflects the value the reseller itself adds, and the customer will pay VAT on this part, and the rest on the whole chain of added value. Details could be debated, but that seems logical, and has the benefit of being relatively simple to process.Now for second-hand goods, VAT has already been paid for the WHOLE chain once. It's neither logical nor fair that the customer should pay VAT a second time on the whole value of the sold item, whatever the price is; IMO, to keep it logical and fair, in this particular case of second-hand goods, the customers should only have to pay VAT on the margin of the reseller, and nothing else, since this is the only additional value that has been added at this point.There are other cases of weird use of VAT: for instance, and you'll see that on your energy bills (at least this is so over here), you pay VAT on the final price, including any TAXES that apply to this particular energy supply, and taxes on energy are prolific. VAT on taxes? This sounds completely nuts to me, but this is just how it works.We can understand in all those cases the reason why though: VAT is simply the LAST tax that is applied on anything sold (so businesses, that don't pay VAT/or can get a refund, depending on your tax system, can still pay the other taxes...) The reason is simple, yet the fact is completely mind-boggling IMO. Feel free to think it's an amazing wonder though.

author: soldar
author_rank: Super Contributor
timestamp: October 09, 2019, 09:29:40 pm
content: Quote from: SiliconWizard on October 09, 2019, 09:08:27 pmNo need to be dismissive or rude. Are you French by any chance?Quote from: SiliconWizard on October 09, 2019, 09:08:27 pmAs I already said, in such cases sales of second hand goods have a special regime to account for that. What more do you want?Quote from: SiliconWizard on October 09, 2019, 09:08:27 pmI agree that taxes over taxes should be absolutely a no no but that has nothing to do with the concept of VAT itself.

author: beanflying
author_rank: Super Contributor
timestamp: October 10, 2019, 03:00:34 am
content: And overnight for the AussiesNo explanation WHY just WE HAVE for a no change to buyers and sellers bottom lines at the end of the day. As it is not immediate unlikely the old system was not conforming to our tax laws but

author: Ultrapurple
author_rank: Super Contributor
timestamp: October 10, 2019, 03:21:58 pm
content: All interesting reading. Like most, I morally object to paying (more?) taxes on secondhand goods, wherever they originate.I believe in the UK retailers who deal in second-hand goods can use something called a "VAT Margin Scheme". I'm no accountant but I believe it means they only "collect" (=pay to government) VAT on the difference between their buying and selling prices. So let's say I sell my old TV to UsedElectricsLtd and get £10 for it. They put it in their shop window and someone buys it for £15. UsedElectricsLtd "collect" (=pay) VAT on the difference, ie the VAT levied on £5.This mirrors the way B2B and B2C work, again at least in the UK. B2B sales DO charge VAT, however that's known as "Input Tax"; once something is sold on to a customer the business charges them VAT on the total price (known as "Output Tax", subtracts the VAT they paid as Input Tax, and pays the rest to the Government. That's one reason you see lots of prices in the professional world listed as ex-VAT prices: if you're buying for a business the VAT usually doesn't matter as you'll claim it back when you sell the item on.I don't like paying taxes but I do realise they're a necessary evil (at least in my part of the world if I want roads constructed, a library, or a doctor when I fall ill; I could of course travel by helicopter, buy my own books and have a private doctor but that would cost me rather more).

author: CatalinaWOW
author_rank: Super Contributor
timestamp: October 10, 2019, 03:57:08 pm
content: I suspect that much resistance to VAT in the US is not based on economic theory. It is just a reaction to the amount. The VAT schemes mentioned here and that I have encountered in my travels range from 10% to 25%. Sales tax in the US ranges from 0% to somewhere in the 12% range. And in the average persons mind higher is not better. While we value government services such as roads, fire and police the need for more and higher cost versions of the same isn't so clear that we want to double the tax rate. And sure, I understand that the VAT rate can be set wherever it needs to be. Remember, it is a perception issue, not an economic analysis.

author: soldar
author_rank: Super Contributor
timestamp: October 10, 2019, 04:06:43 pm
content: It used to be that, in a country, importers imported, distributors distributed and retail buyers bought retail.Internet and other technologies now allow the final consumers to buy directly from sources abroad.Governments can only force to collect taxes companies that have a physical presence in their jurisdiction.The new technologies mean companies like Google or eBay can set up shop in low tax places and provide services in higher tax places where, if they have no physical presence, they cannot be taxed or, if they have physical presence they can shift profits to their tax haven and declare them there.The big and unprecedented change is that EU countries want to tax profits realized outside their jurisdictions. the so-called "google tax". This is a huge and unprecedented change. It is a very complicated issue that will have to be worked out in the coming decades. Countries will need to realize they cannot act unilaterally and this issue will probably have to be agreed globally. European countries imposing taxes on American companies against the desire of the American Government is just another way to start another trade war which is the last thing we need.

author: coppice
author_rank: Super Contributor
timestamp: October 10, 2019, 04:37:18 pm
content: Quote from: sokoloff on October 06, 2019, 02:55:53 amIsn't that a list of things we keep seeing that California is not providing to any reasonable degree?

author: soldar
author_rank: Super Contributor
timestamp: October 10, 2019, 04:58:26 pm
content: Quote from: CatalinaWOW on October 10, 2019, 03:57:08 pmAmerica is an interesting case. The several States cooperate among themselves to a very high degree and that is one of the causes of the success of America as a country. At the same time Americans are very distrustful of other countries and cooperate little. America, rather than a "Diplomatic service" has a "Threatening service". "Do as I say or you'll be sorry".Americans remember the post-WWII world where America ruled the world and many think America can go back to that. Old timers believe the Metric system, VAT, the UN, etc. are inventions of the Devil to undermine America.American culture has many things that make it more productive than other cultures but the common American on the street has a strong resistance to change and that is why America in many ways is alone among advanced nations. VAT is pretty much universal but nobody liked it at first. Leaders should lead the way always but especially when the need arises to do unpopular things. American elected representatives have taken the easy way but that is harming America in the long run.VAT is one thing where America is falling behind. The Metric system is another. The banking system is another. The world advances and America is left behind.In Europe VAT was introduced country by country and that was that. At first people complained because nobody likes change but the truth is that it simplified the tax system a lot and now nobody would go back. the introduction of the Euro was similarly handled. In America they can't be convinced to use $1 coins instead of bills.

author: Bassman59
author_rank: Super Contributor
timestamp: October 10, 2019, 06:43:07 pm
content: Quote from: CatalinaWOW on October 10, 2019, 03:57:08 pmIndeed it's a perception issue, in much the same way that replacing for-profit health insurance premiums with a tax for a single-payer system would appear to be "more expensive" because many people get insurance through their employer and the employer pays the bulk of the premium. But I digress.Here in Arizona, we don't have a "sales tax," as such. We have what's called a "transaction privilege tax," which is levied on businesses for the "privilege" of doing business (selling stuff) within the state. The burden is on the business to pay the tax, and since the business is allowed to pass on that cost to the buyer, we see charges for "sales tax" on our receipts.Also, as of the beginning of this month (October, 2019), in Arizona, out-of-state "marketplace facilitators" (which means eBay, Amazon and the like) and "remote sellers" are required to collect the TPT from Arizona buyers and remit same to the state. (If you are a remote seller but you sell through a facilitator through Amazon, the tax is collected once, and by that facilitator.)Clearly this is meant to level the playing field, as it's unfair that a mail-order (hah, I'm old) or Internet business is not required to collect sales tax while a brick-and-mortar business must.(All that said, I believe that sales taxes are inherently regressive and as such a pretty shitty mechanism for funding necessary government operations.)

author: sokoloff
author_rank: Super Contributor
timestamp: October 10, 2019, 07:13:24 pm
content: I'm happy to exclude certain necessities (clothing and food ingredients as a start), but I believe that funding government with a mix of taxes, specifically including taxes that hiteveryone, is a key control mechanism against out of control government growth funded by invisible "other people".

author: windsmurf
author_rank: Frequent Contributor
timestamp: October 10, 2019, 11:03:15 pm
content: Quote from: Bassman59 on October 10, 2019, 06:43:07 pmThis perception is based on propaganda that continues to be promulgated by insurance company lobbys and politicians accepting their bribes.https://tarbell.org/2019/04/i-used-to-be-a-propagandist-for-insurance-companies-learn-the-four-truths-the-insurance-industry-doesnt-want-americans-to-see/

author: soldar
author_rank: Super Contributor
timestamp: October 11, 2019, 03:01:58 pm
content: Quote from: Bassman59 on October 10, 2019, 06:43:07 pmFair or unfair don't enter into it. Governments, like thieves, get their loot where they can and how they can, they are not looking to be "fair".Mail order, internet or brick and mortar don't enter into it either. The main question is whether the government in pursuit of loot has any jurisdiction over the seller. If the seller has a physical presence in that jurisdiction then the state can grab the seller by those parts and demand payment but if the seller is in another jurisdiction and legally the sale is completed in another jurisdiction then what you gonna do?Suppose a buyer in West Undershirt, VA, buys something from a seller in another state. How can the State of VA force someone in another state to do anything? It can't. It can only legislate that buyers under its jurisdiction pay a "Use Tax".If the seller, instead of being in another state is in another country then things get considerably more complicated. How do you think the state of VA would react if it was told by another country that businesses operating in VA must collect taxes on sales to that country?It is not an easy problem to solve. Now some countries want to make the big internet platforms, like eBay, collect the tax. If eBay has a presence in that jurisdiction then it is not difficult to enforce but if they have no presence then I can't see how they can do it.It is complicated and it is complicated even further by the fact that states and countries would like other states and countries to cooperate and yield but they would not want to do the same in reciprocity.And governments have taxes on pretty much anything they can tax. Taxes on consumption might be regressive but you have to tax a little of everything because if you put too heavy a burden on one aspect of the economy then people, not being entirely stupid, will move to other things. There is a limit on how much you can tax something before cheating or avoidance becomes more attractive.Trying to tax $1 items coming from China is, very probably, a waste of time and resources. I mean, if a government can twist eBay's arm enough that eBay will give them some money then I guess it might be worth it although it might give smaller competitors an edge if they don't have to do the same.Did I say it is complicated?

author: soldar
author_rank: Super Contributor
timestamp: October 11, 2019, 03:25:28 pm
content: Quote from: sokoloff on October 10, 2019, 07:13:24 pmI agree with the sentiment. I hate it when our politicians always say they will only raise taxes on the rich. Later the gullible soon find out they are rich if they are not living under a bridge.But exempting "necessities" is (1) misleading and (2) a minefield.(1) Take clothes. (a) They are extremely cheap and you can clothe a family for very little. (b) Most spending on clothes does not fall into necessity but into style. Most clothes today, especially women's clothes, are discarded when they are almost new and very serviceable, only because fashion and styles change and because the user feels like changing. Discarded clothes are becoming a serious problem. They take energy to make and then soon become trash. Clothes have become one use and throw-away items. So, no exemption for clothes. If they were taxed higher maybe people would wear them longer.(2) Take food. In many places groceries are not taxed but "prepared food" is taxed. And then you need to draw a line separating the two and, while it might look like it makes sense, it soon gets silly. Those are not distinct categories but a continuum. The owner of a small grocery store should not need to be an expert in tax classifications of groceries.

author: coppice
author_rank: Super Contributor
timestamp: October 11, 2019, 03:38:23 pm
content: "We will only raise taxes on the rich" == "We will only take money from people who have some" which is something that kinda goes without saying.

author: sokoloff
author_rank: Super Contributor
timestamp: October 11, 2019, 04:26:06 pm
content: I’m also fine with flat sales taxing everything and giving a refundable tax credit of whatever amount of taxes we wished to exclude to account for necessities consumption taxes.That’s cleaner in a lot of ways anyway.

author: sokoloff
author_rank: Super Contributor
timestamp: October 11, 2019, 04:34:00 pm
content: Quote from: coppice on October 11, 2019, 03:38:23 pmThere are an enormous number of people who have money and are not rich

author: coppice
author_rank: Super Contributor
timestamp: October 11, 2019, 04:36:53 pm
content: Quote from: sokoloff on October 11, 2019, 04:34:00 pmYes, that was my point.

author: CatalinaWOW
author_rank: Super Contributor
timestamp: October 11, 2019, 04:58:50 pm
content: Rich is a funny thing. By historical standards almost everyone in the western world is rich (enough food, clothing, place to sleep and so on). So now in rich countries like the west rich is defined by relative wealth. Which leads to silliness like in the US where those whose income is in the bottom quintile are by definition poor. Independent of assets, quality of life or anything else.

author: magic
author_rank: Super Contributor
timestamp: October 11, 2019, 05:28:50 pm
content: I'm not sure if you would want to be the bottom quintile of America.In terms of USD per USD, food is cheaper elsewhere and so are services and medicine. Particularly the latter I have heard is quite expensive in the West. I guess you get to pay a lot for all the government regulation, licenses, certificates, inspections - plenty of people live off of that and they aren't doing it for free. And the costs are hidden behind some insurance company or government collecting a flat rate from everybody, which means no one is going to strongly scrutinize every single bill for overcharging, like an individual would. And you cannot execute on the spot a dishonest doctor or manager, which is a disadvantage compared to some communist regimes with state funded healthcareCar insurance is more expensive too because you will be crashing into more expensive cars.There is lots of reasons why $1 in America is not the same as $1 in Eastern Europe and not the same as $1 in Africa.

author: sokoloff
author_rank: Super Contributor
timestamp: October 11, 2019, 05:36:04 pm
content: What's the alternative to being in the bottom quintile in America that you're comparing against?Being in the bottom quintile here vs having the same USD-equivalent amount of income someplace else?Or being in the bottom quintile here vs being in the bottom quintile someplace else.I suspect that being in the bottom quintileanywherepretty much sucks.

author: soldar
author_rank: Super Contributor
timestamp: October 11, 2019, 05:40:37 pm
content: The new, simplified tax form.

author: CatalinaWOW
author_rank: Super Contributor
timestamp: October 12, 2019, 01:16:45 am
content: Quote from: sokoloff on October 11, 2019, 05:36:04 pmBeing in the bottom quintile obviously is worse than the other four. But to take one not too uncommon example, a retired person who owns their home, draws social security and has a multi-million dollar money market position. In poverty. Dumb to have the money in a money market, but doing fine in reality.The real silliness comes when you have a lower quintile definition and programs to "end" poverty. How do you eliminate the bottom quintile? Give the all a guaranteed income of twice the quintile boundary? Just creates a different bottom quintile, or an unstable loop condition.

author: soldar
author_rank: Super Contributor
timestamp: October 12, 2019, 07:52:25 pm
content: Just pull people out of the lower quintiles and into the upper ones. That's what they did in Lake Wobegone.