newsbytes@clarinet.com (01/18/90)
BRUSSELS, BELGIUM, 1990 JAN 13 (NB) -- According to European Commission (EC) sources in Brussels, European expenditure taxes, known as the value-added tax (VAT), are in disarray, despite the target date of 1 Jan.1992, when all VAT levels throughout the EC are due to be harmonized. The effect of the punitive VAT levels has been to stifle the information technology industry at birth, according to some sources. In Belgium, for example, one of the most heavily taxed countries in Europe, the standard one hundred franc note, equivalent to about $2.70, does not buy much these days. For every BF 100 in salary, the typical Belgian must pay BF 45 in income taxes, reducing the take-home pay to just BF 55. With a VAT rate of 19 percent on computer goods and services, that reduces the effective money in his/her pocket to just BF 44.55 when buying and running a computer with the proceeds. Other high technology products on sale in Belgium have even worse VAT levels. TVs and receivers are taxed at the 33 percent luxury rate, with a further $120 to $160 a year TV license fee payable by TV users. Satellite TV watchers have an extra license tax of BF 2,000 ($55) levied on their equipment. Other European countries are slightly better off. The UK, for example, charges a blanket 15 percent VAT rate for most items, although UK citizens don't escape TV license fees. To make matters worse, many computer companies in Europe seem to apply their own exchange rates when importing electronic products from the US. The typical conversion rate is one dollar equals one pound. So a $2,000 PC costs UKP 2,000 ($3,000) in the UK even before the 15 percent VAT is added. In West Germany, VAT rates are relatively low at 14 percent, but higher wages mean higher prices can be charged. The result is the same--technology goods and services are very expensive. Greece, meanwhile, has a low level of VAT for computers at 16 percent, although a luxury rate of VAT is payable if a monitor is sold separately - the monitors are assumed to be TV by the local tax inspectorate. Luxemburg enjoys the lowest VAT rates in Europe, with a blanket rate of 12 percent across most items sold. Worst off is Ireland with a punitive 25 percent VAT on most items, although, as in the UK, there are exceptions, such as children's clothes, although the EC is expected to outlaw such exemptions shortly. So where does this leave the man and the woman in the EC street? Companies can claim much of the VAT back, but ultimately, the VAT cost is passed on to the consumer, probably accounting for the fact that computers are not the big sellers in Europe that they are in the US. (Peter Vekinis/19900117) -- This, and all other articles in the clari.nb hierarchy are Copyright 1990 by the Newsbytes Information Service. Only paid subscribers may access these articles. Any unauthorized access, reproduction or transmission is strictly prohibited. We will reward the first provider of information that helps us stop violators of this copyright. Send reports to reward@clarinet.com.