Michael Eriksson's Blog

A Swede in Germany

Some follow-ups based on receipts (and some thoughts on VAT)

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Sorting my private and business receipts for the past quarter for my VAT declaration, I found two that have some impact on past texts:

My receipt from the the Swedish book sale:

As I see from the receipt, the VAT on books (and in general) in Sweden is an absurd 25 %. The German rate is a more civilized rebated 7 % (to a standard rate on most products of 19 %—already very hard to defend).

This is something that I failed to consider when complaining about prices, and it does explain a portion of the price disparity. Say, for easy numbers, that the pre-VAT price of a book is 10 Euro (or its equivalent in SEK). Then the post-VAT price is respectively 10.70 and 12.50. At least for cheaper books, this might explain most of the difference in price. For more expensive, unfortunately, the lion’s part remains.

(A completely fair comparison would also consider factors like purchasing power, but that would require too much research. However, for the record, the purchasing power of low earners tends to be higher in Sweden, but that of high earners lower, relative Germany.)

My receipt from the post-flight meal from my Finnair fiasco:

In the text, I write that “We hit the ground again at 18:48; the time until official landing was obviously longer, and likely left us still about an hour late (scheduled landing was 17:55).” and “At this point, I had no eye on the time anymore, but I was likely done [with the meal] shortly before eight.”.

The receipt claims that my “tab” was opened 19:09 and closed 19:47. Add a few minutes before and after, and this would be a good estimate of my stay. The “shortly before eight” is verified, and the “about an hour late” seems plausible, as I had no checked luggage and could move fairly directly to the restaurant.

Excursion on VAT:
The above is a good illustration of one of my own pet theories: Governments like VAT, because the enormous amount of money diverted to the government usually flies under the radar.

With income tax, the earner knows that he has earned amount X*, but for some reason only received amount Y. Why? The government. With VAT, he sees the price tag including** VAT to begin with and if the price is too high, who is to blame? The store. (Or the manufacturer, capitalist greed, whatnot.) That the government might well be the single party earning the most money on the purchase, and might well be responsible for the lion’s share of the difference between end-price and accumulated costs, that does not register with most people.*** (And, cf. above, even those who are aware of it, might fail to consider it in all circumstances.) Assume, in contrast, that customers saw the pre-VAT price of products cited and, again and again, had to shell out that Swedish 25 % extra at the cashier’s. The acceptability of VAT, I suspect, would drop very considerably.

*However, this amount is also often distorted, if not so blatantly as with VAT. Consider e.g. the Swedish “arbetsgivaravgifter” or the portion of social-security and health-insurance the German employers pay on behalf of their employees. In both cases, the increase of employment costs push the nominal salary down by a similar amount, implying hat they are actually paid by the employee, but in such an indirect manner that many are unaware of it.

**At least in every country that I have made purchases in. From fiction, I have the impression that this is different in at least some parts of the U.S.

***This will depend on factors like the overall markup on an item and what business has charged what business what amount during production. Note hat Value Added Tax is fairly agnostic on how the value has been added, and treats hard work by employees no better than a luxury markup. (Of course, this is just looking at VAT, without factoring in e.g. the income tax on salaries and taxation of company profits. Overall, the government is almost always the main earner in e.g. Germany.)

Written by michaeleriksson

April 13, 2020 at 5:59 am

Posted in Uncategorized

Tagged with , , , ,

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