eBay Sales Tax

[churchilllafemme]

Another reason to avoid buying on eBay: I was just reminded that as of January 1, eBay is charging me a 10% sales tax on each of my eBay purchases. They will collect sales tax from any buyers in "marketplace responsibility states," including Minnesota, Washington, Iowa, Connecticut, New Jersey, Alabama, Oklahoma, and Pennsylvania. And eBay says, "Additional states will be added to this list at a later date." Man, they just get you coming and going...

[CMur12]

I don't have a problem with Internet vendors charging sales tax for buyers in states that have it - it's only fair, really - but 10% across the board isn't right.

Thanks for passing this information along, John. I wasn't aware of it.

- Murray

[drmoss_ca]

A Canadian seller on eBay who has a business making such sales must collect GST (a 5% federal sales tax) for a buyer in Canada, private sellers don't have to do this. Provincial sales taxes aren't collected for most provinces, but for NS,NB and NL the provincial sales tax (possibly combined with GST as Harmonized Sales Tax) must be collected and remitted to the province concerned.

Talking of sales taxes: Long ago, with the introduction of medicare in Canada, NS chose to apply a 10% Health Services Tax, which would be used exclusively for paying for universal healthcare. It provided adequate funding, but was looked upon with hungry eyes by other government departments, and now the provincial sales tax (which is a VAT and applied multiple times to some goods that pass from manufacturer to distributor to retailer and then to the customer) goes into the general income of the province and is spent on salaries, benefits and pensions for the government rather than on healthcare. In the meantime, administrators and lawyers decided they wanted a share of healthcare spending, and we now have more than one administrator for each bed. We are f****d.

[CMur12]

Oh, those administrators and lawyers ...

(Scoundrels, it would appear, wherever they are to be found.)


- Murray

[Brutus]

That’s why I prefer a Value Added Tax (VAT) scheme, where the VAT increases only by a proportional amount (the VAT rate) to the amount at which the price increases:

A business buys goods from their supplier for the amount “X” and pays VAT on their purchase.
They then sell the goods for (let’s assume) “X plus 20%”.
They then only add VAT for these additional 20% to the sales price (that does already include the VAT they previously paid) and the customer ultimately only pays VAT on “X plus 20%”.
While the business transfers VAT on “X plus 20%” to their fiscal authority, they will deduct VAT they paid on their earlier purchase on “X”, so that the additional VAT load that the business charges its customers is only on the added value 20% (hence Value Added Tax).
No matter how many times the goods are sold and resold to another business, the customer pays only the VAT on the last price and this price does not include the full tax on the various selling prices at each step over and over again.

If instead a business is charged the sales tax “X” by their supplier, includes it in their price, and subsequently sells for “X plus 20%” and charges the full rate sales tax again, then the customerer pays the sales tax multiple times.

I also very much prefer the European practice of including VAT in the posted sales price.
You know exactly how much you have to pay and it avoids odd numbered prices as well.


B.

[Pauldog]

But couldn't that make total VAT payments on an item eventually total more than the original value of the item?

It's similar in the USA to selling a car. When you buy a new car, part of the cost in most states is sales tax. Then, if you sell the car privately, the buyer pays sales tax again. And if that buyer eventually sells the car, there's more sales tax.

Sales tax is usually very regressive, taking too much from people of lower means. In Wisconsin, even clothing is subject to sales tax.

[Brutus]

But couldn't that make total VAT payments on an item eventually total more than the original value of the item?

It's similar in the USA to selling a car. When you buy a new car, part of the cost in most states is sales tax. Then, if you sell the car privately, the buyer pays sales tax again. And if that buyer eventually sells the car, there's more sales tax.

Sales tax is usually very regressive, taking too much from people of lower means. In Wisconsin, even clothing is subject to sales tax.

No, not really.

The additional VAT is only supposed to be charged on the amount that the price goes up (or that “value” is added).
So each time an item is sold again, the VAT will be charged on the selling price, but a (commercial) seller may deduct the VAT that he paid earlier when he himself bought the item.
So in each and every sale the VAT is always the VAT rate on the price the item is sold for.


Example:
Let’s say the VAT is 10% and you as a business buy goods for a net value of $500, so you would have had to pay $550 inclusive of VAT to the person whom you bought the goods from.

You sell the goods for $800 net, $300 more than your paid for.
The price goes up by $300 to $800 and the VAT goes up by 10% of the $300 ($30), to a total of VAT of $80.
Still only 10% total VAT collected.

The person who bought thhe items from you sells them next for $1000 net, or $1100 with VAT.
So he will collect $100 VAT when he sells the goods again, but as he has paid already $80 VAT when he puchased the goods himself from you, he will only need to transfer the $20 to the tax man.

The last business collects $100 VAT of the selling price from their buyer, but as they paid already $80 VAT when they bought the goods from you, they only have to transfer the additional $20 to the tax man.

In any case, the end-purchaser still only pays 10% VAT on the price he pays (in our example $100 VAT).
The tax man gets $50 from the first company, $30 from you as second company, and finally $20 from the last company.


Kind of difficult to explain, but I hope that clarifies it.

I found also this YouTube video that may help: https://www.youtube.com/watch?v=a6RB4rIxWqI


It was all supposed to be fair and square, but then they started jacking up the VAT rate, with reduced VAT rates for “essentials” like basic food items.
German VAT in 1968 was 10% and now it is 19%, which is still at the lower end of the European range.
Some European countries charge up to 25% (Sweden), but if I shop right as a (now) tourist from outside of the EU, I can claim the VAT back when I take my purchases out of the EU and have Customs certify the export.

Or, if I order a new razor directly from Herr Aust and he mails it to my home, he can take the 19% VAT out of his advertised price. Nice...



B