Sales taxes in the US range from zero (in five states) to about ten percent in some cities, with most areas paying about 5-6%. US consumers tend to ignore sales tax except on the tightest budget or biggest transactions; ask, and they will say a book costs $4.50, not $4.95 (under 10% sales tax).
I know that GST/PST is something of a political hot potato in Canada right now, but given that most Canadians pay around 12-13%, does that make you more aware of the tax as a component of cost? Do you automatically look at a $20 item and think of it as actually costing $22.50?
Same for UK and Euro residents in countries with high VAT and sales taxes - do you automatically consider the tax amount in pricing your purchases? I’ve seen UK ads for goods that include the VAT amount with every price - is that custom, or required, and how widespread is this practice in Europe?
Here in the UK, prices always include the full price, including sales tax (there’s no need to even clarify it with an “inc. VAT”). Although I have seen a few rare cases of “£X.YZ + £A.BC VAT” on websites, and most websites do break down the bill and add the tax on the end on the final invoice (and the checkout).
I don’t know if there’s a law which says that has to be the case, but even if there wasn’t, the price difference is enough (VAT’s currently fixed at 20%, before that it had been 17.5% for as long as I could remember) that it would probably be grounds for some sort of complaint.
Yes, in the UK nearly all prices are displayed VAT included, so we don’t even really think about it.
I don’t if it’s still the case, but it used to be OK to quote prices without VAT as long as this was clearly stated. Normally, this would be done in trade publications, as different rules regarding VAT apply to businesses.
Business to business focused, err, businesses in the UK often show prices ex VAT alongside the inc VAT one, but for regular consumer stuff it’s just the price including VAT, and not broken down at all.
The price in Canada is always the merchant’s price, in my experience. Tax (or taxes, in those provinces that have separate sales taxes) gets added on at the till.
When i lived in Canada, back in the early 1990s, i was very conscious of the amount that got added at the till, because i had never before lived in a place where this happened. For the first six months at least, i would always calculate out the final cost in my head whenever i was making any significant purchase, and the fact that the price was added to the ticket price made me very conscious of how much tax i was paying.
Before i moved to Canada, i had spent over a year living in England, and while i was paying VAT the whole time, i never thought about it because it was always included in the price.
I was living in Australia during the debate over introducing a GST, but i moved to the United States just before the GST was implemented. GST in Australia, like VAT in Britain, is included in the ticket price, not added at the register. Australia is one of the few places that has a significant Dope presence where a significant GST was instituted in fairly recent memory. You should ask the Aussies whether they noticed an immediate jump in prices after the introduction of the GST.
The last government, in an effort to stimulate the economy, lowered it to 15%. The current government, in an effort to destroy the economy, put it up to 20%. Before the crash of 2008 it had been 17.5% since the eighties.
Thanks, all. I was going to followup with a question for my fellow 'Murricans but I want to get a clean and complete response so I will spin it out to another thread.
Still interested in more opinions and thoughts on the CA/UK/Euro front.
The GST replaced another more complicated sales tax system, so our prices were displayed inc. tax both before and after the GST introduction. My perception at the time was that prices rose sharply in the months before the GST was introduced and then leveled off when it came in. The government made a big deal out of monitoring prices once the GST was in and loudly proclaiming they’d come after anyone who used the new tax as an excuse to profiteer, and then they claimed success because very few cases were detected. I remember being annoyed by that and thinking that all the price rises happened in the six months prior. No idea if my perception accurately reflects reality.
One change that was caused by the GST was the end of software bundling on new computer purchases. Pre-GST, hardware was taxed at a much higher rate than software something like 17.5% vs 2.75%. By bundling software with the sale of the hardware and thereby changing the proportion that was hardware vs software, the overall tax rate was reduced, making the bundle cheaper than the hardware would be alone. After the GST came in, software and hardware (and everything else) were taxed at a flat 10% rate so there was no longer any advantage to adding software packages into the bundle.
Some people still get angry when told they have to buy software separately, because they remember the days when a new PC came with Office, a virus scanner, and a selection of games, and they don’t understand that those things aren’t part of Windows.
We currently have a VAT rate of 23% in Ireland. There are however some items considered “necessities” on which VAT is not charged (food, medicine, education, books, children’s clothes, etc.) Lower rates also apply to some items.
In any event, the amount including VAT is always shown and the amount excluding VAT is rarely shown.
On a recent 10-day trip to Canada I never got used to the fact of paying more than the displayed price, and felt slightly cheated every time.
So it’s been quite a while, since well before I would have paid attention. I’m wondering now if I saw ads from the UK (which has never been on my radar in that respect) or Australia (which was). Aussies: was it common to advertise stereo and electronics gear with something like the VAT listed separately?
Thanks. It didn’t occur to me to include Oz in the mix despite being a good case for the same general inquiry. More from downunda appreciated if anyone has any further comments.
Regular prices include VAT, so how can you not consider it?
This same week, my neighbors and I had to decide whether to repair and insulate the roof. The budgets were given as “[amount] plus VAT”, which led both to confusion (not even the accountant was sure which VAT range to apply, regular 21% or reduced 10%, so we did the accounting as if it was 21%) and to people complaining that “this isn’t the proper way to price something, they should include all fees and taxes!” We’ll also have to pay 5% of the value budgeted for the work permit (5% of the basis, without taxes).
My own work (ERP Consultant) is priced without VAT. Note that both in this case and in the previous one, the clients are highly likely to be “VAT transferers” themselves: it’s only final customers (such as my tenement or the people at the supermarket) who pay VAT without being able to charge it to someone else.
I don’t know whether there are laws stating which goods/services must be priced one way and which the other, but we definitely expect “all-inclusive” prices.
I remember a lot of panicking about a jump in prices but that there wasn’t really one as most of the things the GST applied to were already (invisibly to the consumer) taxed. There was a lot of debate about what should be left out, many women were furious that sanitary items were not considered essential enough for instance and the minutia of things with mixed elements, some taxable, some not was discussed at tiresome lengths.
There is a bed retailer who advertises proudly that their bedding system is so good it is considered a health aid and is therefore GST free. http://www.beds4backs.com.au/healthy-beds/ but that is the only instance in a long time it has come into my notice. My supermarket receipts asterisk the GST applicable items and give me a GST total at the bottom.
I had never in my life considered that the cash register would ring up more than the sum of the ticketed prices. My travels in the US and Canada was very confusing. I often go out with say $10 and buy to that amount, I could just never get it right over there in those places with a sales tax added at the register.
In Canada, the GST is a value-added tax (VAT). The reason they don’t build it into the prices is apparently because tax rates vary by province. I don’t think there are geographical tax variations smaller than provinces, but I could be wrong. Federal GST is 5%, formerly 7%. In Ontario, there was an 8% provincial tax charged the same way. It was called PST, provincial sales tax, but then they combined the two into a 13% HST (harmonized sales tax). I believe in Alberta there is no provincial tax, and they charge only the federal 5%.
But yeah, when I buy something, I always mentally add 15% (easier than 13%).
