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The way this article is worded makes it sound like Denmark has a 'book tax'. Denmark has a VAT on goods (and services), which is 25%. But Denmark doesn't have

by Svip 1y ago

The way this article is worded makes it sound like Denmark has a 'book tax'. Denmark has a VAT on goods (and services), which is 25%. But Denmark doesn't have split VAT values, so it's either 25% or nothing; no in-between. So they are just proposing removing the VAT from books. (Some goods and services are already exempt from VAT.) And if you wonder why Denmark doesn't simply lower their VAT or introduce a split VAT system like in most other countries; the answer is technical inertia (or technical debt, if you will). Most Danish accounting and banking systems are hardcoded to assume 25% (or nothing). So if a politician want immediate change to VAT, removing it from a category of goods/services is their only option. Edit: I realise I was careless in my wording, when I wrote "hardcoded to assume 25% (or nothing)"; I meant that the systems only assume one rate (or nothing), not that the value of 25% was hardcoded (though it is in a few (lesser) systems I've encountered). I apologise for the confusion.

z3t4 1y ago
The cheif/over-engineerer will account for variable tax rates in the future, especially if they plan to sell their erp system in other countries.
- tossandthrow 1y ago
  Not only that, but this person will account for arbitrary VAT schemes and embed a small, but Turing complete, dsl to calculate the vat rate.
mlinhares 1y ago
Insane that technical debt and general incompetency in software can produce such unexpected side effects.
- tossandthrow 1y ago
  Why the general incompetency added on? Ad the other commenter wrote: The 25% is assumed - this has nothing to do with competence but to what level an assumption is true. Everybody can point fingers at 25 year old code and call the developers incompetent because surrounding requirements have changed.
  - pmontra 1y ago
    Considering that's 25 year old code I'd expect at least a #define VAT 0.25 and not hardcoded values all around the source code. However I don't expect a table (db table, array, etc) of product categories with their own VAT code or a user defined exception list. That extra code would inevitably add bugs that are not worth the trouble. Adding an exception for books probably requires an update of the apps.
    - deleted 1y ago
      [deleted]
    - bruce511 1y ago
      VAT is not a compile-time value. It's a runtime value. Nevermind not scattering it in your code, it shouldn't be in your code at all.
      - Ekaros 1y ago
        VAT rate can and does change. As such it can be different on different dates. And this change might not even correspond to change of year. So it really has no place in code.
        tossandthrow 1y ago
        The US is used to this as the rate changes between states and product categories - it is not reasonable to adopt this view onto other VAT systems. You can not transfer categorical statements like you do.
    - kqr 1y ago
      Such a constant would be no better -- they don't want to change the VAT rate across all product types. The code missing is that for per-product type variation in VAT rate, which sounds complicated enough that Iawould expect a good engineer to shrug and say YAGNI until it's actually necessary.
  - throw748848485 1y ago
- hvb2 1y ago
  That general incompetency you're referring to there can also be worded as For years they didn't build unneeded complexity. And it sounds like for many more years to come. So they're just efficient. Any developer will have had to make things configurable afterwards, that's fine, just evolution of code. Hard coding also means that it's less likely to break. No customer (in Denmark) can influence this, so why make it configurable? Over time this does become a problem when source code is lost/companies go under.
- geysersam 1y ago
  So if the House introduced a 'fixed' VAT tomorrow, say $1, not proportional to the price of the product, would that not break most software used to compute VATs? We have to make assumptions. Good software doesn't account for every future possiblity, but it is easy to change when the requirements change.
- rsynnott 1y ago
  During the financial crisis, Ireland added half a percent to VAT. Wanna guess what happened? (The funny thing is, the _reduced_ rate had been 13.5% for years, but a non-integer rate for the main rate _still_ caused widespread IT problems...)
uoaei 1y ago
What is the primary reason for hard-coding these kinds of things? Gotta imagine CScientists would have debated this during the design phase. I have some hypotheses, are any of these right? * correctness/verifiability analyses * security? in compiled tools (prevent malicious re-configuration) * an assumption of the inertia of law * general incompetence/naivete ???
- bruce511 1y ago
  There's absolutely no reason to hard-code the value. That's just bad programming. However you can't expect programmers to predict all possible future compatibility. In my country VAT has a current rate. That rate can, and has, changed. But we have one rate. Some goods are exempt, but products have a VAT yes/no field. Perhaps in the future the system will change. One possible change is that VAT attracts different % for different products. I'm not predicting that, or coding for it now. VAT rules could change to anything- I can't code against that.
- Svip 1y ago
  The real problem is actually less the exact rate of 25%, but rather that most of the systems only assume one rate. Denmark was the first country to introduce a general VAT in 1967, and whilst the rate has changed (last in 1992 to 25%), the number of rates have not. So lowering the general VAT rate would likely be possible in a 1-3 year time frame (depending on unknown factors), but lowering the general VAT rate would be a significant loss on state finances (thus not interesting to politicians) (and as someone else pointed out, it mostly favours high spenders, which is also politically dicey). However, introducing a split rate would definitely require a time frame of at least 4 years, and no politician are willing to wait that long for a politician win.
  - StopDisinfo910 1y ago
    > The real problem is actually less the exact rate of 25%, but rather that most of the systems only assume one rate. This can’t be the case. You have to apply the VAT of their own country to customer from other part of the union and some services are exempt. In all likelihood, most systems in Denmark already supports using different VAT for different products. Plus, most accounting systems won’t be Denmark specific anyway but simply configured for it.
kasperni 1y ago
> the answer is technical inertia (or technical debt, if you will) One of the issues. There are number of others. For example, VAT is a value-based tax. A VAT cut gives the biggest savings to people who spend the most. Since wealthier people typically spend more, they would save more money in absolute terms. For example, a family with a food budget of 3,000 kr. would save 300 kr., while a family with a food budget of 8,000 kr. would save 800 kr. Politically, some parties might prefer tax breaks that focused on lower-income groups. Another issue, will the cost savings actually be passed on to the consumer?
- kqr 1y ago
  Hmm. You say "tax break" but I could argue split VAT results in the opposite: a hike in consumption tax. The base VAT rate can be set higher if the VAT on desirable consumption is lower. I.e. it's not that rich people pay less tax for books -- it's that rich people pay more tax for non-books!
  - kgwgk 1y ago
    Denmark already has one of the largest VAT rates in the EU (25%) - only surpassed by Finland (25.5%) and Hungary (27%). (I guess you may also argue that those two countries have reduced rates and that proves your point!)
- incangold 1y ago
  VAT can be considered a regressive tax because the poorer I am, the more of my money I spend on goods and services, and the less on savings and investments. As a proportion of income, poor people spend more on VAT than rich people. I think it’s about double, in the UK. So you’re right that cutting VAT helps richer people more in absolute terms. But in terms of of quality of life it helps poorer people more. [edit] assuming we’re talking about VAT on things that everyone buys. Which is why tax codes often exempt essential items from VAT.
  - hdgvhicv 1y ago
    Give people as a whole more money and they can spend it on housing. Given the decades long supply problem with housing it simply means rents increase to fill the void.
arghwhat 1y ago
Note that while you have 25% VAT on things, actual VAT accounting is fully dynamic and banking and accounting systems handle this just fine. On the incoming side, bills can come from other countries with an entirely arbitrary VAT value, so there the VAT value is recorded from the bill. On the VAT refund side, arbitrary values are used even for Danish VAT, as companies can get full, fixed fraction or even entirely variable fraction if VAT refunded. For example, a company dinner can only be partially VAT refunded as you had private benefit of food, and VAT refund of an asset like a van is the set by the ratio of intended company vs private usage. On the outgoing side, most banking and accounting systems would be prepared for other EU countries. There's definitely going to be something hardcoded somewhere (including over 9000 times in the tax systems themselves), but the point is that VAT is already a dynamic size.
Tangokat 1y ago
Worth noting that controlling consumption via extra/less tax on specific products is debated a lot in Denmark. Namely cigarettes have a high added tax (about 2kr/0.3 usd PER cigarette). Increasing the tax and thus the price of cigarettes had a fairly large effect on consumption (0.13-0.82% less cigarettes consumed for every 1% price increase) [1]. Recently it has been debated to remove the VAT from vegetables and fruit to increase consumption of those. The same logic is used for this book VAT exemption (which is good in my opinion) - I doubt we'll see the same effect though. Young people not reading is a complex problem to solve but books are really expensive to buy, so it's a good place to start. [1] https://vidensraad.dk/sites/default/files/node/field_report_download/vidensraad_tobaksafgift_2015.pdf https://vidensraad.dk/sites/default/files/node/field_report_...

by Svip 1y ago

z3t4 1y ago

The cheif/over-engineerer will account for variable tax rates in the future, especially if they plan to sell their erp system in other countries.

tossandthrow 1y ago
Not only that, but this person will account for arbitrary VAT schemes and embed a small, but Turing complete, dsl to calculate the vat rate.

mlinhares 1y ago

Insane that technical debt and general incompetency in software can produce such unexpected side effects.

tossandthrow 1y ago
Why the general incompetency added on? Ad the other commenter wrote: The 25% is assumed - this has nothing to do with competence but to what level an assumption is true. Everybody can point fingers at 25 year old code and call the developers incompetent because surrounding requirements have changed.
- pmontra 1y ago
  Considering that's 25 year old code I'd expect at least a #define VAT 0.25 and not hardcoded values all around the source code. However I don't expect a table (db table, array, etc) of product categories with their own VAT code or a user defined exception list. That extra code would inevitably add bugs that are not worth the trouble. Adding an exception for books probably requires an update of the apps.
  - deleted 1y ago
    [deleted]
  - bruce511 1y ago
    VAT is not a compile-time value. It's a runtime value. Nevermind not scattering it in your code, it shouldn't be in your code at all.
    - Ekaros 1y ago
      VAT rate can and does change. As such it can be different on different dates. And this change might not even correspond to change of year. So it really has no place in code.
      - tossandthrow 1y ago
        The US is used to this as the rate changes between states and product categories - it is not reasonable to adopt this view onto other VAT systems. You can not transfer categorical statements like you do.
  - kqr 1y ago
    Such a constant would be no better -- they don't want to change the VAT rate across all product types. The code missing is that for per-product type variation in VAT rate, which sounds complicated enough that Iawould expect a good engineer to shrug and say YAGNI until it's actually necessary.
- throw748848485 1y ago
hvb2 1y ago
That general incompetency you're referring to there can also be worded as For years they didn't build unneeded complexity. And it sounds like for many more years to come. So they're just efficient. Any developer will have had to make things configurable afterwards, that's fine, just evolution of code. Hard coding also means that it's less likely to break. No customer (in Denmark) can influence this, so why make it configurable? Over time this does become a problem when source code is lost/companies go under.
geysersam 1y ago
So if the House introduced a 'fixed' VAT tomorrow, say $1, not proportional to the price of the product, would that not break most software used to compute VATs? We have to make assumptions. Good software doesn't account for every future possiblity, but it is easy to change when the requirements change.
rsynnott 1y ago
During the financial crisis, Ireland added half a percent to VAT. Wanna guess what happened? (The funny thing is, the _reduced_ rate had been 13.5% for years, but a non-integer rate for the main rate _still_ caused widespread IT problems...)

uoaei 1y ago

What is the primary reason for hard-coding these kinds of things? Gotta imagine CScientists would have debated this during the design phase. I have some hypotheses, are any of these right? * correctness/verifiability analyses * security? in compiled tools (prevent malicious re-configuration) * an assumption of the inertia of law * general incompetence/naivete ???

bruce511 1y ago
There's absolutely no reason to hard-code the value. That's just bad programming. However you can't expect programmers to predict all possible future compatibility. In my country VAT has a current rate. That rate can, and has, changed. But we have one rate. Some goods are exempt, but products have a VAT yes/no field. Perhaps in the future the system will change. One possible change is that VAT attracts different % for different products. I'm not predicting that, or coding for it now. VAT rules could change to anything- I can't code against that.
Svip 1y ago
The real problem is actually less the exact rate of 25%, but rather that most of the systems only assume one rate. Denmark was the first country to introduce a general VAT in 1967, and whilst the rate has changed (last in 1992 to 25%), the number of rates have not. So lowering the general VAT rate would likely be possible in a 1-3 year time frame (depending on unknown factors), but lowering the general VAT rate would be a significant loss on state finances (thus not interesting to politicians) (and as someone else pointed out, it mostly favours high spenders, which is also politically dicey). However, introducing a split rate would definitely require a time frame of at least 4 years, and no politician are willing to wait that long for a politician win.
- StopDisinfo910 1y ago
  > The real problem is actually less the exact rate of 25%, but rather that most of the systems only assume one rate. This can’t be the case. You have to apply the VAT of their own country to customer from other part of the union and some services are exempt. In all likelihood, most systems in Denmark already supports using different VAT for different products. Plus, most accounting systems won’t be Denmark specific anyway but simply configured for it.

kasperni 1y ago

> the answer is technical inertia (or technical debt, if you will) One of the issues. There are number of others. For example, VAT is a value-based tax. A VAT cut gives the biggest savings to people who spend the most. Since wealthier people typically spend more, they would save more money in absolute terms. For example, a family with a food budget of 3,000 kr. would save 300 kr., while a family with a food budget of 8,000 kr. would save 800 kr. Politically, some parties might prefer tax breaks that focused on lower-income groups. Another issue, will the cost savings actually be passed on to the consumer?

kqr 1y ago
Hmm. You say "tax break" but I could argue split VAT results in the opposite: a hike in consumption tax. The base VAT rate can be set higher if the VAT on desirable consumption is lower. I.e. it's not that rich people pay less tax for books -- it's that rich people pay more tax for non-books!
- kgwgk 1y ago
  Denmark already has one of the largest VAT rates in the EU (25%) - only surpassed by Finland (25.5%) and Hungary (27%). (I guess you may also argue that those two countries have reduced rates and that proves your point!)
incangold 1y ago
VAT can be considered a regressive tax because the poorer I am, the more of my money I spend on goods and services, and the less on savings and investments. As a proportion of income, poor people spend more on VAT than rich people. I think it’s about double, in the UK. So you’re right that cutting VAT helps richer people more in absolute terms. But in terms of of quality of life it helps poorer people more. [edit] assuming we’re talking about VAT on things that everyone buys. Which is why tax codes often exempt essential items from VAT.
- hdgvhicv 1y ago
  Give people as a whole more money and they can spend it on housing. Given the decades long supply problem with housing it simply means rents increase to fill the void.

arghwhat 1y ago

Note that while you have 25% VAT on things, actual VAT accounting is fully dynamic and banking and accounting systems handle this just fine. On the incoming side, bills can come from other countries with an entirely arbitrary VAT value, so there the VAT value is recorded from the bill. On the VAT refund side, arbitrary values are used even for Danish VAT, as companies can get full, fixed fraction or even entirely variable fraction if VAT refunded. For example, a company dinner can only be partially VAT refunded as you had private benefit of food, and VAT refund of an asset like a van is the set by the ratio of intended company vs private usage. On the outgoing side, most banking and accounting systems would be prepared for other EU countries. There's definitely going to be something hardcoded somewhere (including over 9000 times in the tax systems themselves), but the point is that VAT is already a dynamic size.

Tangokat 1y ago

Worth noting that controlling consumption via extra/less tax on specific products is debated a lot in Denmark. Namely cigarettes have a high added tax (about 2kr/0.3 usd PER cigarette). Increasing the tax and thus the price of cigarettes had a fairly large effect on consumption (0.13-0.82% less cigarettes consumed for every 1% price increase) [1]. Recently it has been debated to remove the VAT from vegetables and fruit to increase consumption of those. The same logic is used for this book VAT exemption (which is good in my opinion) - I doubt we'll see the same effect though. Young people not reading is a complex problem to solve but books are really expensive to buy, so it's a good place to start. [1] https://vidensraad.dk/sites/default/files/node/field_report_download/vidensraad_tobaksafgift_2015.pdf https://vidensraad.dk/sites/default/files/node/field_report_...