the mini Blog

Here in the UK, we really do get ripped off. For everything we buy we get charged an extra 17.5% for the VAT (value added tax). So what does this pay for? All sorts of government things such as health care, etc. But for electronics goods, the price does increase a lot, that is why we pay around ⅔ extra than you US folk.
So good old Apple discovered a loophole in the tax law, that allows them to avoid paying the extra 17.5% VAT on sales in the iTunes Music Store (for the UK).

Over the past two years Tesco, Asda, Britannia, HMV, Amazon and Woolworths have all set up delivery operations in the Channel Islands to exploit a law which allows retailers outside the European Union to sell goods worth less than [£17, which is roughly US$30] to UK consumers free from VAT.

This means that we would have to pay 12p less for songs (67p down from 79p). That is around $0.23 per song. Considering the fact that we already pay $1.34 for a song, $0.35 more than the Americans do, I’m sure that there are many people who would welcome this change. “Apple confirmed that it is looking at setting up a similar operation on Guernsey,” so that’s it then? Well it looks like the government has realised what has been happening:

The Government is becoming increasingly concerned by the amount of tax being avoided by these operations. Treasury officials believe the practice will soon cost the Government up to £200m a year. Nick Goulding, the chief executive of the Forum for Private Business, said: “This is more evidence of the urgent need for Gordon Brown to end this cynical tax dodge.“

Damn, it always seems to good to be true. All we can do is pray and hope that Apple can help us, and that the government won’t take much action.

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UPDATE: It seems that this story is quite old, and Apple had denied it back in January. Sorry for this, but I had no idea. It looks like the government did screw us over! [link]