As I stated above, in Germany the VAT of 19% or 7%, respectively, is nationwide, there are no regional sales taxes. I don’t definitely know, but assume that this is also the case for most other European countries, at least the ones I’ve been to, as I never had to pay a higher price than what was on the sticker anywhere.
Well, I can’t remember the last time I actually saw an actual ‘label sticker’ on an item.
They are all bar-coded, and the price rings up at the register. And then the tax is added onto the total.
I’ve worked at a bog retail company, with thousands of stores all across the country. Printing a label would be difficult, because:
- cost of printing labels and sticking them on items.
- items are frequently put on sale.
- items are frequently moved from stores/regions to others where they’re selling better.
Even printing on the receipt something like: item price $8.59 + tax .58 total $9.17 would be hard – that could change at each different store, and the government expects the tax to be calculated on the total sales (rounding can work in the governments favor). So the tax is computed on the total of all items in the purchase (except non-taxable ones, like food & clothing are often exempted) and added to the end of the receipt.
This is indeed due to the grass-roots level of setting taxes in the USA. In more centralized countries like Europe, it’s easier to set things at the central government (reichfuhrer) level.
Doesn’t this also mean that the business is forced to give an unsecured loan to the governmnet?
You pay the VAT when you buy the raw materials that go into your product. Then you build the product. put it up for sale, and wait for it to sell. When it sells, then you charge VAT on it, and pay that to the government. Eventually (maybe monthly) you file a form with the government and wait for them to get around to paying back to your the VAT you overpaid way back when you bought the raw materials. That could have been quite a while ago, and it could be another while before that payment actually gets to you from the government.
I’d think that for even a small business, they could have thousands of dollars (Euros) tied up in VAT prepaid and awaiting repayment from the government. Free use of money by the government, but could be hard on a small business – cash flow is often a major problem for them.
VAT is claimed back as part of your business cycle, so doesn’t have to wait for you to collect it on the next part of your business. Paperwork every month.
But as an effective loan to the government, yup, they get you every way.