View Full Version : Why only perfumes, cigarettes, alcohol etc only duty free?
01-22-2010, 11:36 AM
Why do duty free outlets carry only items like perfumes, cigarettes, alcohol, watches, jewelry etc? Is there some law which restricts what can be sold duty free?
Ond of the obvious restriction would be size I guess The items have to be small enough to be carried by the traveller without violating rules of carry on baggage.
If that is the only consideration though, why donít we see items like cameras, laptops etc.? I know there are some airports like Dubai, that probably do have cameras and electronics, but on an average I have not seen these at any other airports that I have been to.
Size should also not be an issue at border crossing by land, but even there I have seen the regular stuff only.
01-22-2010, 11:42 AM
I don't know but I am guessing that these items:
Have a high profit margin
Are very efficient in terms of revenue per square foot
Have higher taxes, making them in greater demand for duty-free shopping
01-22-2010, 11:52 AM
Size is one factor. Another factor is what you pay taxes on, and how much the tax is. I've seen cameras, etc., at duty-free stores in Australia and in the UK, because you're avoiding GST of 10% in Australia, and VAT of 17.5% in the UK. In the US, the tax you'd be avoiding would be sales tax at a lower rate, which can be avoided by buying from an interstate supplier.
01-22-2010, 11:56 AM
I'd always assumed it was a holdover from earlier days of wooden ships. Some of the contents of the captain's cabin were not considered cargo, and not taxed, so he could still entertain, and be comfortable. A convenience everyone agreed on, that got transferred to all of us when we travel.
It probably seems a little funny -- buying moderate quantities of perfume, booze, cigarettes, under the pretense of personal consumption, when you probably wouldn't finish it all at once.
You can conjecture that the local governments have decided to let people enjoy a small respite from sales taxes, as a courtesy to the traveler. Who might like the item, and buy more, this time paying taxes.
01-22-2010, 12:04 PM
Missed edit window:
There's a meme that we, all of us, are overtaxed. Overtaxed. Taxed to death. And that the duty-free shop must be some magical, legal limbo, where no laws apply. It's come up, as such, on this board before.
Once you drop the meme you can say, "Some things, at some times, aren't taxed. Just because the government is being nice, admittedly to some unspecified advantage to itself." Then the whole thing comes into perspective.
01-22-2010, 12:08 PM
It's just limited space for the retailer. They need to decide what sells best and stock their store with those items.
Things like cigarettes and liquor usually have special "sin taxes" on them which can be quite high. As such, providing you a tax free version can be a considerable deal. Other items will be high value stuff like jewelry or electronics. Normal sales tax can add up on those items. Add in ease of carrying it away.
Alcohol and tobacco are subject to high excise taxes in most countries, significantly higher that the sales tax or VAT that applies to normal items - so the potential tax saving is higher.
Perfume and jewelry: stereotypical items to propitate people of the female persuation. Which a harried male traveler may belatedly think of at the airport.
01-22-2010, 12:30 PM
In the US, the tax you'd be avoiding would be sales tax at a lower rate, which can be avoided by buying from an interstate supplier.
I agree that items which are taxed higher in the country are more attractive and will occupy more shelf space. Alcohol and cigarettes do fall in this category and are also the most popular items for purchase by travellers.
However, the duty free shops also carry fashion apparel, jewelry and pefumes. I may be wrong but I think these attract the same tax as cameras and laptops for example.
Cameras and laptops have the added advantage that, just like cigarettes and alcohol, they are listed separately and one of each is generally allowed entry into the destination country without being included in the general allowable limit of import duty for other goods.
Probably it is things like invalid warranties across countries etc. that make these things less desirable.
vBulletin® v3.7.3, Copyright ©2000-2013, Jelsoft Enterprises Ltd.