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back to article Report: American tech firms charge Britons a thumping nationality tax

The nationality tax levied on Brits by our American cousins that design and sell technology has been laid bare once again in a mini study, and it makes for a molar-grinding read … for people living on this side of the pond anyway. A range of hardware devices were compared but the biggest differential in UK and US consumer …

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Tax????

They don't fucking pay tax here!

Nurse, my medicine!

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Alert

Re: Tax????

They and their distribution channels do act as VAT collectors for the Government, though.

They don't pay Corporation tax, as apparently they don't make any profit in the UK. As if...

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Re: Tax????

"They don't pay Corporation tax, as apparently they don't make any profit in the UK."

In that case, they need to increase the prices - they're obviously too low.

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Re: Tax????

"Nurse, my medicine!"

Funny you mention medicine...because in the U.S....the cost of many medicines is much higher for U.S. citizens...than the exact same medicines...made by the exact same companies...in many other countries...such as Canada.

So don't feel so bad...or alone...because there are plenty of U.S. & international drug companies screwing U.S. consumers.

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Re: Tax????

They don't pay taxes in the US either, as they hide their profits overseas.

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Re: Tax????

Funny you mention medicine...because in the U.S....the cost of many medicines is much higher for U.S. citizens...than the exact same medicines...made by the exact same companies...in many other countries...such as Canada.

That's because the NHS and the like can negotiate bulk deals. If you Yanks had a proper healthcare system instead of one designed to bankrupt sick people, you might see a benefit too.

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Re: Tax????

I take your point and fully agree but I'm not sure I'd want to call the NHS a proper health care system. I suppose it is compared to the US though.

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Anonymous Coward

Re: Tax????

"I'm not sure I'd want to call the NHS a proper health care system"

Really? What would you choose to compare it with then?

http://www.commonwealthfund.org/publications/fund-reports/2014/jun/mirror-mirror

Trust me when I say that it is only when you move overseas that you realise just what you really have with the NHS. Free comprehensive healthcare that enables you to purchase competitively priced private health (it has to be to sell) to suit your needs should you wish. The best of both worlds enabling you to not have to choose between treatment and food, health provision and selling the kids into slavery. It also enables the bullying of drugs manufacturers into offering reasonable prices - just check what the US and even Australia pays for some drugs. I'd take it over anything else. Sure, it needs some polishing and a kick up the arse every now and again as well as getting rid of poxy admin suits but it does the job.

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Re: Tax????

Can't say I agree. I've lived and worked in several other European countries and found the health care streets ahead of what we get in the UK.

I could give loads of examples but here's just one. My uncle was diagnosed with skin cancer in the UK, I was abroad at the time and had a cyst. I was operated on within a week as a non-urgent case. My uncle in the UK had to wait three months.

I could mention that in the UK I've had to wait a week or two to see my GP before now, whereas abroad I can always see my doctor the same day if I don't mind waiting.

I can't comment on commonwealth countries as I've never used health service there.

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Re: Tax????

I take your point and fully agree but I'm not sure I'd want to call the NHS a proper health care system. I suppose it is compared to the US though.

Well, soon you'll be able to see how it compares to US norms. Once TTIP (the transatlantic trade and investment partnership) is signed, without an NHS opt-out, large healthcare companies as well as outsourcing giants like Cerco, will be able to buy up the NHS and run their fiefdoms exactly like US hospitals, clinics etc. We will have no way of taking them back into public ownership and - quite probably - no way of avoiding the need for private healthcare insurance, along the lines of that provided by Unum etc.

Our government is quite happy to relinquish any control over healthcare costs and procedures in this country to multinationals and an international tribunal set up to protect said multinationals. So much for guarding our "sovereignty".

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Re: Tax????

But was it free? Lots of EU states have good healthcare, although not measuring up in that report but they charge various explicit levies to fund it. How does that work in comparison?

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Anonymous Coward

Re: Tax???? - (and Tax Farming ...look it up on wikipedia)

Never done the comparison vs the UK, but I've heard the price Australians pay for medication that is on the PBS (Prescribes Benefits Scheme), is pretty damn good, never paid more than $15 for stuff that I've been told would otherwise have cost hundreds. I've also heard that on a per $ basis the current Australian medical system delivers more benefits than almost anywhere else in the world.

If having the most expensive iPAD's and Cokes in the world is the price I have to pay, then so be it, but I still think it stinks, and once a decent alterntative turns up, I'm taking it. For example Australia is one of the least expensive places to buy a Golf GTI, so it's possible to get a decent global price from a quality manufacturer.

I've seen the justification of the uplifts, sometimes it stacks up, e.g. to import clothing into Australia legally with all taxes adds about 30% to the wholesale price, when you add the 120% retail markup to that, (clothing is a horribly risk industry, so the markup believe it or not is justified, as you have to purchase stock 6-8 moths ahead of time and wear the risk of not being able to buy more of the good sellers or and take the hit on the stuff nobody likes, and fashion is a fickle fickle beast which is hard to predict) that 30% tax turns into a 65% difference in the retail price. That's before you factor in the money you pay to customs agents, shipping, risks for currency variation and the other costs that are absorbed by US and Asian based retailers who ship direct, don't pay taxes (that pay for things like the PBS), and are able to dump excess stock becuase they pay their staff crap wages and because the incremental cost of sale is negligible.

Having said that, none of those things apply to Apple, or Google, or Amazon or Warner Brothers or sellers of purely digital goods. They rake excess margin because of their de-facto monopoly positions, and because retail customers have been "educated" to pay more because of legitimate factors that affect other retailers (like the ones I described above). In short many of them are acting like complete pricks.

Maybe if more of the "excess profits" went to the people who actually produced the goods in developing nations, or to local employees who actually added some value this would be more forgivable, but these decisions are made by people who only see numbers, accountants, CFO's and their short-term thinking hedge fund masters.

Don't blame the local employees of these companies, they probably hate the uplift as much as you do,. The ones to blame are the people benefiting from the the current incarnation of the financial system (the one that screwed everything up in 2008/2009) that has stopped being able to pull money out of you via government subsidized (ie by you via your tax), support programs, and now intends to screw you via any other means necessary. The fact they can do it outside of a country that might hold them accountable, just makes it that much easier.

Part of me cant wait until either Euro or Asian companies give me a decent viable alternative.

Signed

Angry of Mayfair.

(Anonymous Coward)

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Anonymous Coward

Re: Tax???? - (and Tax Farming ...look it up on wikipedia)

Trouble is, lots of important medicines are not on the PBS. Been several cases cited on TV recently about drugs that have real measurable benefits as opposed to "in some cases" but they are not available. Being cheap on PBS is fine if it is on the PBS. PS Australia is bloody expensive for healthcare and just about everything else. Alcohol, food, clothing, you name it. I can buy clothes made in China cheaper in the UK than in Australia, and often of better quality and likely off of the same production line. Go figure.

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Re: Tax????

It does depend which EU country you were in. The more developed EU countries (Germany, France, Denmark, The Netherlands) all spend substantially more on healthcare per capita (not to mention the private contributions through compulsory insurance).

The countries from the original EU that spend less are places like Spain, Italy, and Portugal. Then the newer EU members - which have different cost structures (i.e. they pay less) and have lower life expectancy (healthcare costs go up exponentially as you age).

When you look at all sorts of quality of care measures, then the NHS tends to be middle of the range. Not the best, but certainly not the worst. Obviously there are some things it does better and some it does worse than other EU systems.

Overall, it seems like the NHS is underfunded, but provides pretty good care when you take that into account, meaning it's a reasonably efficient system.

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No justification?

I would be curious to examine items imported from the US but through a third-party instead of the OEM. I would expect that the price differences would be similar, given the difference in market sizes and the potential for exchange rate effects, but that's just a guess.

On the other hand, it is entirely possible that a world-wide conspiracy has set about to inflate the cost of US goods into the UK purely to soak Brits. I'm convinced now. I take my prior statement back. Off to the bunker...

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Anonymous Coward

Re: No justification?

Very good. Not sure about the market size though as the EU is much bigger than the US.

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Anonymous Coward

Re: No justification?

I would be curious to examine items imported from the US but through a third-party instead of the OEM.

Difficult for a number of big name brands. See Levis for example - they'll sue you if you try to import their overpriced jeans yourself.

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Anonymous Coward

Re: No justification?

> I would be curious to examine items imported from the US but through a third-party instead of the OEM.

Well, the MacBook, iPad and iPad mini my company recently purchased had their tracking start at Shenzen, China, not the US.

So the question really is why would importing from China to the US be so much cheaper than importing from China to the UK.

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TRT
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I think...

that you have to compare the US ticket price with the UK ex VAT price, rather than the amount punters have to shell out. In the US & Canada, you pay the ticket price plus regional and federal sales taxes, in the UK our ticket price generally includes VAT.

Then you have to convert to dollars at the prevailing exchange rate to make a useful comparison.

I wonder how UK manufactured goods compare? Do we have any consumer tech exports?

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Re: I think...

US sales taxes can be avoided or minimized by choosing where you purchase something from though.

I think the interesting point is that we would know precisely how much we were getting ripped off if the grey channel was not considered illegal. As it is, we just have to take whatever price the company sets us, or sets its disties.

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Anonymous Coward

Re: I think...

"I wonder how UK manufactured goods compare? Do we have any consumer tech exports?"

Best comparison I can see is for Dyson. A DC40 Animal at Walmart is $407.66 (inc tax) where as at Asda it is £367 (inx tax). So the US are saving over $200 compared to us (according to open exchange rate).

Given that Dyson is a UK company it's shocking to see it so much cheaper in the US, especially considering they are being sold by effectively the same company!

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Re: I think...

That's only half true...

businesses collect sales tax on anything purchased in your state, or from a business with a location in your state. The percentage varies by state.

Even then... You are compelled to pay that tax at the end of the year, via a box on your state tax forms.

it would be a mistake to think your govt is more adamant about collecting taxes.

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Re: I think...

you have to compare the US ticket price with the UK ex VAT price

Exactly. The figures given in the article are exaggerated, and seemingly chosen to give the worst impression

The UK Kindle Fire that costs £329 in the UK is the entry-level HDX 8.9" (including special offers). Before VAT that works out to £274, or $468 at current rates.

The current US price is $379, so the UK price is 23% more, not 39.5% as claimed.

If, instead, you compare the top-end 64GB/4G one, the prices are $625 (UK) versus $594 (US), which is only a 5% difference.

Do we have any consumer tech exports?

Even if we do, they're probably made in the same Chinese factories as the US "exports".

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TRT
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Re: I think...

Dysons are all made in Malaysia now.

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Anonymous Coward

Re: I think...

"Dysons are all made in Malaysia now."

That info actually makes the comparison even more valid, because macbooks are all manufactured in China.

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Re: I think...

businesses collect sales tax on anything purchased in your state, or from a business with a location in your state. The percentage varies by state.

Even then... You are compelled to pay that tax at the end of the year, via a box on your state tax forms.

it would be a mistake to think your govt is more adamant about collecting taxes.

On out of state purchases, the consumer is supposed to pay a "use" tax and pay it at the end of the year. Would you think it is accurate to say that 100% of this revenue is reported by each consumer and remitted in full to the IRS each year?

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Unhappy

Re: I think...

Many moons ago on a trip to the US, a friend of mine was outraged by the $ price of trainers being half of what he had just paid in £.

The trainers were made in the UK (those were the days) just around the corner from his house.

Not impressed- considering they had to be sent over the pond...

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Re: I think...

An interesting comment on trainers. Some years ago, more years ago than I like to remember my wife and I both bought some as walking shoes for a relatively few dollars while in Washington DC. I do not remember the name of the maker, but it was no one famous . They lasted us for years. Never been able to buy anything with a similar lasting quality since. 12~24 months and they are clapped out. UK ones are all damned expensive someone is making far more than they should.

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Re: I think... Far East manufacture there you have it

Much cheaper to ship stuff to the States across the Pacific than send it to Europe across the Indian Ocean, around southern Africa and up the eastern Atlantic, less pirates too. Probably shipping larger volume to the States as well.

Another factor is the EU directive that such goods should last 3 years against the one year nominal warranty. Got to recoup that extended warranty loss some how.

As a by the by New Scientist is a UK magazine but it's cheaper to subscribe to it in the States, according to the prices quoted on their website, don't know how the various taxes in the USA affect the final price though.

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Re: I think…

Tom 38,

On out of state purchases, the consumer is supposed to pay a “use” tax and pay it at the end of the year. Would you think it is accurate to say that 100% of this revenue is reported by each consumer and remitted in full to the IRS each year?
no, it would not be accurate to say that. Anyone who pays use tax knows that it is remitted to his state’s taxation department rather than to the IRS.

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Re: I think...

My dad used to pickup train cars loaded with new cars being shipped from Canada down to the US, cars going all the way to Florida or Texas still had sticker prices thousands less then the same car sold across the street from where it was assembled.

When the Canadian $ went down, book prices went up (even when printed in Canada), when the Canadian $ went back up, prices didn't drop at all, but they did stop printing both the US and Canadian price on the books.

They just charge as much as they think they can.

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Re: I think...

Which? published a table, not shown in this article, that compares pre and post tax prices in the UK and the USA. Their research didn't fall into the obvious trap that you describe but, unfortunately, this article cites the price difference including California sales tax at 8.41% and UK VAT at 20%; this is hardly an apples to apples (if you'll pardon the pun) comparison.

In any case, the pre-tax prices all showed very significantly higher costs in the UK. The Telegraph has published the table, btw.

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Re: I think... Far East manufacture there you have it

I looked at getting New Scientist for my brother in the US. The price did look cheaper at first glance, but the small print meant you needed a minimum twelve month subscription (several months longer than his trip) and a credit card direct rolling debit, which I never get round to cancelling on time. There was no fixed term sub. So I never got him the "cheaper" US version.

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Re: I think...

of course not, that would be naive...

you painted a picture of a very lax attitude toward tax collection here in the US, i was simply pointing out that we all have taxes we are supposed to pay, but avoid at times (or as much as possible, whatever).

i have never heard anyone use the justification of "no sales tax" when deciding to order online. it's always : availability, base price or ordering direct from the manufacturer.

generally, shipping negates most potential tax savings... a $400 item would be $28 in sales tax in my state. if i overnight it... it would cost considerably more than the gas it takes to drive to the store AND sales tax combined.

if you want any support for your high dollar purchase, you buy from a retailer you can take it to...

it's just not that easy anywhere to "beat the system" plain and simple. can it be done? yes. is it rampant? hardly.

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Anonymous Coward

Re: I think...

"They just charge as much as they think they can."

This was true, is true and always will be true. It will never change.

The UK peeps get charged more because we're willing to pay more. No other reason is necesary.

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TRT
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Re: I think...

Has anyone mentioned TTIP yet?

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Re: I think...

I remember years ago on the Money Program there was an investigation into this and they interviewed Rover who proudly boasted they could sell a Rover MG sports built in Britain for considerably more than they do when they ship them to Hong Kong.

Richard Branson also though it hilarious that CDs he manufactured in the UK sold for nearly half the price in the US. Thanks Richard.

My other half worked for a electronics firm that actually made components in the UK. Their pricing was purely based on "how much we know we can get away with!" So the US got a part for 10p a pop whereas the UK firms would have to pay 50p.

Adobe has always maintained the difference in cost for the UK and US versions of their products was due to 'language issues'.

Really just need a UK wide campaign to 'Stop buying over-priced crap!" for a month.

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Re: I think...

"I think the interesting point is that we would know precisely how much we were getting ripped off if the grey channel was not considered illegal"

It's explicitly NOT illegal to buy in mainland europe and it's often substantially cheaper even with shipping on top.

I've had a number of UK "exclusive distributors" bluster at me about "You can't do that" and had them go remarkably quiet when I point out that should they try to prevent me (or my employer) from doing so they'd be facing legal action for breaches of the rules regarding the single european market.

IANAL but my opinion is that "exclusive distributors" are probably illegal under EU competition laws.

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Re: I think... Far East manufacture there you have it

"Much cheaper to ship stuff to the States across the Pacific than send it to Europe across the Indian Ocean, around southern Africa and up the eastern Atlantic, less pirates too. Probably shipping larger volume to the States as well."

It's even cheaper+faster to load it onto a train and have it arrive in a marshalling yard in germany 2 weeks later.

The reason we're seeing supercontainer ships on EU runs is largely because it's the only way to bring prices down enough to compete with railfreight - right now thet volumes passing over the EU-russia-china line are modest but they are increasing all the time.

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Re: I think... Far East manufacture there you have it

I think I was told it costs around 50p to ship a TV from China to the UK. However it costs many time more to to get it the 150 miles from the Cargo port to the distribution warehouse.

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Re: I think...

The truth may be that the UK Mercantile Class is much greedier than it is Stateside, and can get away with price gouging much more easily

And, for my money, the people here are more accepting of such anomalies, instead preferring to "curse the darkness rather than light a candle".

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Shipping costs

If it is cheaper to fly to New York, buy a Macbook and fly back then that is obviously how they import them. But they have to pay the time of their staff to sit on transatlantic flights for 8hours

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What TRT said.

A 13-inch Macbook is indeed:

£1499 on the UK store

$1799 on the US store, which equates to £1054 today on xe.com.

However, that £1054 is sans-tax. After normalising it with UK VAT, that £1054 becomes £1265. So there's still a £250 (16%) premium for living in blessed Blighty, but one does need to be careful whether you're comparing against America's tax-free online sales, or against local sales tax, which in most states is less than 10%, compared to our VAT rate of 20%.

I did once hear the UK referred to as "Treasure Island" by someone working for a US consumer electronics company. We're known for apparently being prepared to pony up premium prices.

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I've recently come back from the States and bought a Galaxy Tab over there. I paid ~$320 over there including tax, so around £200 at the time + £5.50 credit card charge. The same tablet over here was £320, so the old tale of just replace the currency symbol for US to UK pricing seems to hold!

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I've no doubt that tech firms charge us more (because the market will bear it etc) but if you've ever tried to import something into the UK you'll know that HMRC takes a ridiculous amount of tax.

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HMRC charge a buttload of duty if you import things through all the proper channels, yes (20% VAT plus at least 5% extras, IIRC). If however you just set off on a 1 week "vacation" and buy some stuff while you're there (like, say, a Macbook or iPhone), then bring it back unboxed and obviously used, you pay approximately nothing extra. At least that has been the experience of several friends of mine, anyway.

The fun part comes if you try to take defective US kit to a UK retailer for repair... :/

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TRT
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There's a limit of £390 on personal import of other goods, £135 on postal import. So if you buy a MacBook overseas, you are supposed to declare it and pay the duty.

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Anonymous Coward

An acquaintance used to go on regular trips to the US and bring back a couple of vintage US made guitars each time. He never declared them on his return, and promptly sold them for considerably more than he'd bought them for.

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Re:The fun part comes if you try to take defective US kit to a UK retailer for repair..

I bought a pair of Uggs for my girlfriend in New York a few years ago. Pretty much the first time she wore them she scuffed her toe on the curb which made a hole in the boot.

We got in touch with Ugg in the UK and they arranged for a free replacement with no fuss. We did buy them from the actual Ugg store rather than a reseller though so not sure if this made a difference.

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Anonymous Coward

It's common practice for US companies to assume a 1:1 exchange rate.

What they sell for $1000 in the US, they sell for £1000 in the UK or €1000.in Europe.

I can't decide whether it's blatant profiteering

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