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I find it funny that a lot of people can't read the article, so here's an ELI5 case on why VAT isn't discriminatory from our lovely Franch LeChat. Going to add
by coolgoose 2y ago
I find it funny that a lot of people can't read the article, so here's an ELI5 case on why VAT isn't discriminatory from our lovely Franch LeChat.
Going to add TLDR for people: Vat applies to all shit on the market, regardless of where the fuck you produced it.
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The Value Added Tax (VAT) in Europe is designed to be a consumption tax that applies equally to both domestically produced goods and imports. This means that whether a product is made locally or imported from another country, the same VAT rate is applied when the product is sold to the end consumer. This approach is intended to create a level playing field, ensuring that local producers do not have an unfair advantage over importers, and vice versa.
The reason VAT is not considered discriminatory against imports is that it is applied at the point of consumption rather than production. When goods are imported into the EU, they are subject to VAT at the same rate as similar goods produced within the EU. This ensures that the tax burden is the same for both local and imported products, promoting fair competition. Additionally, businesses can often reclaim the VAT they pay on purchases, including imports, which further neutralizes any potential disadvantage.
However, it's important to note that while VAT itself is not discriminatory, other factors such as customs duties and regulatory standards can still affect the competitiveness of imports versus local produce. These factors are typically addressed through separate trade policies and agreements rather than through the VAT system.
- lazyeye 2y agoAnd if you read a previous comment it effectively means imported goods are taxed twice. Both in their country of manufacture and then again in the country where they are sold. It makes sense to tax local companies with a VAT tax to fund their local govt/infrastructure. But imports are get nothing for that tax. If you are a European exporter and there is no tariff/tax in your export destination then you only get taxed once. And thats why "where the fuck you produced it" matters.
- rahkiin 2y agoBut those taxes serve different purposes? On fuel we have VAT (for commerce) and also other taxes (for road maintenance). Get yourself a good transatlantic deal to get rid if import taxes (and stick to it)
- lazyeye 2y agoHuh...it's just a financial penalty imposed on the manufacturer that goes to the govt. Whatever labels/reasons you want to assign it is completely irrelevant.
- whazor 2y agoSo for example, if both sides each have a 2% import tax. Then it would be unfair because a 20% VAT would increase that import tax to 2.2%?
- lazyeye 2y agoNot sure what point you are making. Are you suggesting that VAT is a tax on the tax component only?
- bardak 2y agoMost US state sales taxes also apply to imported products so should othe countries consider that a tariff as well?
- lazyeye 2y agoI think Trump is advocating for reciprocity so yes if they want to then of course. Ultimately the objective is to to remove trade tariffs/taxes completely but that's not going to happen till there is an incentive for countries to come to the table.
- bardak 2y agoVAT is not a tarrif or trade tax it is simply appling a consumption tax to all goods foreign and domestic.
- lazyeye 2y agoSee my original point.
- bardak 2y agoOther countries are not going to let the USA determine domestic tax policies. If they did remove VAT from items imported from the United States it would lead to the absurd situation where a US merchant could import an item from Germany without VAT and then sell it to consumers in Germany without VAT undercutting German retailers and denying the German government their consumption tax revenue
- lazyeye 2y agoNo problem. In that case the US can restore balance in the trade relationship with tariffs.
- aredox 2y agoThe problem is in the US, not in the EU. The US is in effect applying an "export" tax.
- Paradigma11 2y ago"Both in their country of manufacture and then again in the country where they are sold" What US taxes are you talking about that the EU does not have? The only thing you have shown so far is that things in the EU are more expensive than the US. Which is not really a big secret.