viper699
Well-known member
None of it matters to me, it’s nothing I can control ever
How Tariffs Will Affect Photographers
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If the middle person increases the value, the net VAT is the amount attributable to the increase in value that person provided as their tax is based on their final value and they reclaim what tax they paid on their purchases. That does NOT happen with sales tax as it’s always on the final retailer. In my career I spent 5 years fighting with the CA Franchise Tax Board on this distinction as it related to corporate income tax.
A tariff raises the Cost of Goods Sold.
Under these policies there will now be a tariff and sales or USE tax on the final product in the US. Prices will rise or margins will fall depending on supply and demand and other factors.
An interesting article by Thom Hogan on what the current situation may mean for photographers…..
www.bythom.com
A Questionable Transition into Summer | Cameras and Photography Explained | Thom Hogan
Buy camera gear while it's still in stock if you need it
eBay and other resellers of used good will be happy for a bit. Our Arizona summers will be that much hotter.An interesting article by Thom Hogan on what the current situation may mean for photographers…..
A Questionable Transition into Summer | Cameras and Photography Explained | Thom Hogan
Buy camera gear while it's still in stock if you need it
viper699
Well-known member
Blank sailing is already happeningAn interesting article by Thom Hogan on what the current situation may mean for photographers…..
A Questionable Transition into Summer | Cameras and Photography Explained | Thom Hogan
Buy camera gear while it's still in stock if you need it
Trans-Pacific blank sailings soar as ocean shipments plunge
Container shipping capacity on the Asia-U.S. trade route has sharply declined as carriers ramp up blank sailings.
www.freightwaves.com
One thing I was just thinking of is the refurbished market may flourish. The tariffs apply to newly imported goods. If Nikon USA, for example, refurbishes an already imported lens then they can sell it without consideration for tariffs. And third parties may start doing refurbishment as happens with electronics today. As refurbished goods have a lesser warranty than new the cost of legal obligation is also reduced.
Anthony
Well-known member
The VAT paid by a middle person (registered for VAT) on the increase in value is reclaimed from the government, and therefore is not a burden on the middle person (cash flow considerations, which can be positive, apart). VAT on the middle stages is not economically cumulative.
Because of the reclaim aspect of VAT, the economic burden of VAT is only on the unregistered buyer, typically the final consumer or a business not registered for VAT because it is too small. Similarly, the economic burden of a sales tax only falls on the final consumer.
See, eg https://tax.thomsonreuters.com/blog/what-is-the-difference-between-sales-tax-and-vat/
Also https://taxpolicycenter.org/briefin...ing a credit for,and turnover taxes with VATs.
Robert S
Well-known member
I no longer have a passport. In 2004 [ I think it was 2004 ] I went to live in China. Taught English. That's a laugh. Anyway I spent over two years in Jiangsu Province. In 1996 I went to Indonesia and lived the life of a cashed up expat. I have lived in five countries: UK, Australia, NZ, Indonesia, and China. Visited a lot more countries. I know very little about taxation, iternational trade etc. What I do know is that I made the right decision to move to Australia from the UK in January 1978. I give things away. Economically irrational on steroids. I collect religions. My children are older than me. Interestingly my grandchildren are older than my children. Karma is fun at times. My children gave me a poster twenty five years ago. It was of an orangutan looking confused. The text was "Just when I knew the answers to life they changed the questions." I am still confused. Question for this thread: If I win Blotto on Thursday, get a passport, travel to the USA to photograph birds, and accidentally get a photo of Kim Karcrashagain with her knickers around her ankles, will I be put in jail for selling the photo?
Johan Schmidt
Well-known member
USA is still the biggest market in the world. If tariffs do affect demand, the surplus production will be shipped to countries like Australia and with the AUD = 64c USD, it'll be a bargain to buy from Australian vendors
My crystal ball is broken. I have no clear and concise idea of what the future will bring.
If I end up havng to live my life with the photo gear I currently have, I'll have a lot more, and better, gear than I ever dreamed of having 25-35 years ago.
If I end up havng to live my life with the photo gear I currently have, I'll have a lot more, and better, gear than I ever dreamed of having 25-35 years ago.
Robert S
Well-known member
I don't understand international trade Johan. I tried learning from this web site but I just became more confused. https://www.facebook.com/reel/1316970032719733
I checked and it is a can of worms!!
In the UK some goods are exempt, VAT is charged on things like: goods and services (a service is anything other than supplying goods) hiring or loaning goods to someone. selling business assets. There are 3 different rates of VAT that can be added to products. Which one applies depends on the goods and services, and how they’re used. Small businesses that have a low turnover don't pay VAT and some businesses can claim back the VAT they pay. At this stage my brain hurts.
This my vary in different counties I guess.
JP Onstwedder
Well-known member
If companies ship surplus (things they can’t sell in the US as post-tariff prices reduce demand) then the increased supply in markets like Australia may lower prices there, or maybe just reduce waiting times. But a US consumer can’t benefit by buying from an Australian shop as those goods would be subject to a tariff, too. US authorities have already removed the exemption for shipments below $800, and said that they would look to the original country of manufacturing for the tariff rate. So a camera made in China would attract the same tariff whether you buy from a US importer or an Australian shop.
realspeed
Well-known member
I am an Englishman always live in England. Watching what is happening in the USA I am not surprised photographic equipment is going to cost more and less available. Hard not to get political but it is what you voted for
So I buy inputs to an espresso machine for 500 and the input sellers remits 20% VAT or 100. I build and sell the machine to a wholesaler for 3000. I pay 600 VAT and reclaim 100. Net VAT is 500. The wholesaler sells the machine for 5000 and collects 1000 VAT but reclaims 600 for a net of 400. You are saying this is not economically cumulative??? Please explain. This does not happen in the US. The economic burden falls on each stage based on the Value Added hence the name of the tax.
Anthony
Well-known member
VAT is only charged on the ex-VAT price. Using your example, for the VAT to be 100, the ex-VAT price must have been 500. If the total paid by you was 500, then the VAT element would have been 83.33 and the ex-Vat price would have been 416.67.
Your supplier therefore charged you 500 for the machine and also charged you 100 VAT (“output” VAT as far as concerned the supplier). So you actually paid the supplier 600, of which 100 was “input” VAT as far as you were concerned. The supplier paid the 100 VAT to the government.
You then sold the machine for 3000 plus 600 VAT, so the wholesaler actually paid you a total of 3,600. You deducted your input tax from your output tax and therefore paid a net 500 VAT to the government (or paid 600 and received a repayment of 100). So the input tax of 100 was not a cost to you (leaving aside cash flow and administration issues).
The wholesaler sold the machine for 5000 plus VAT of 1000. We need a consumer to complete the VAT cycle, so let’s suppose the wholesaler’s customer was a consumer, unable to reclaim the VAT. The consumer paid 20% tax on the ex-tax price of the machine, just as he would if there was a sales tax of 20%.
The wholesaler paid a net 400 (1000 output tax minus 600 input tax) to the government in respect of this transaction. Alternatively, dependent on timing, the wholesaler paid 1000 to the government and in due course received a repayment of 600.
The government has therefore received three net amounts of VAT, 100, 500 and 400, total 1000. Which is exactly equivalent to the 1000 paid by the final consumer. The businesses have suffered no loss in respect of VAT, ie the transactions were VAT neutral to the businesses. All the VAT paid by the businesses was either repaid/set off by the government or set off against the final VAT payment due from the seller to the consumer, and therefore the VAT was not cumulative. No matter how many stages of added value a product goes through, the total net VAT ultimately paid to the government is no more than the amount of the VAT paid by the consumer.
The end result is, in tax raising terms, exactly the same as a sales tax, but there are other advantages of VAT, some of which are discussed in one of the links in my previous post. There are disadvantages also, in particular an increased administrative burden on the businesses. But the wide use of VAT (aka GST) by economies across the world indicates that it is an effective system overall.
It is also fair to add that, although the example given apply in standard cases, such as your example, there are many complexities, special treatment of certain transactions, varying rates of VAT and varying rules concerning VAT refunds.
surf-shot.com
Active member
Thank you for your input!
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If I may, I remind everyone posting on this thread of BCG Forums guidelines established by @Steve:
“This forum is meant as a positive learning and photo sharing resource and actions at run counter to this purpose will not be tolerated.
ABSOLUTELY NO POLITICS OR RELIGION!! Any post with reference to politics or religion will be deleted.”
Ok now I get your point. Since the value added is likely the highest at the retail end, they cover the FULL value. Yet in the US no middle party pays any tax. In my example, say its Kickstarter with a new ball head design for photographers. If they are working in a VAT regime that will go into cost of goods sold and if they fail they lose that cost. In the US there would be no cost. So there is a COGS at each stage which may be recovered but is not always unless Value is added.
Middle parties may recover VAT paid by adding value, but if they do not they have a cost. In the US, there is no cost ever to a middle party who buys from resale.
Tariffs raise the cost of goods sold also.
When I see pretty much anything for sale in the (in this case) in USD and GBP the numbers stay the same. Something priced at £2600 in the USA is priced at $2600. As you say the GBP at this time is worth more that a dollar, so no account is taken of the exchange rates.
Back in the day when the GBP = 2 USD I saw LR on sale in the USA for $200. WOW I thought - that is only £100, but when I tried to buy it the price changed to £200.
I see Adorama is selling the R1 for $6299:
At current exchange rate that is £4722.23, but as you can see in the UK we pay 6799 GBP. If that USA price is with no sales tax even adding $450 still makes it cheaper than here in the UK if you take account of the exchange rate.
Anthony
Well-known member
The sale to the consumer does, as you say, attract tax at the full value. However, this is not because the highest added value is at the retail end. Retail margins are often tight, with the main value added being higher up the chain. VAT captures the total added value of the whole product cycle and charges the economic effect of the tax to the consumer. The retail sale price may be at a loss to the seller, so his input tax would be greater than his output tax. If the input VAT paid by, say Kickstarter, is less than the output tax collected by them (eg if they sell the product at a loss) then they get a refund of the tax deficit from the government. In the standard case the VAT registered businesses (all except the very small ones) never suffer the economic effect of the tax. They do have an admin cost, however.
There are exceptions in special cases, and there are complications such as some goods being zero rated and some goods being exempt (it makes a difference!), but these would not apply to the coffee machine example. The tax is structured so that in the standard case the VAT paid does not increase the price of the product except for the sale to the consumer. There is sometimes confusion, because prices to consumers are required to show the VAT inclusive price (but a breakdown has to be supplied) whereas in business transactions the prices are normally shown without VAT, because that is what is relevant to the business buyer.
The UK used to have a sales tax (called purchase tax), but that was replaced in the EEC (now the EU) in the 1970s. Since then its use has become widespread around the world. https://en.wikipedia.org/wiki/Value-added_tax According to the OECD, 175 of the 193 members of the UN now have some form of VAT/GST, and the USA is the only OECD member which does not.
Part of that is the legal situation. The length of warranty, return period, etc. are quite different between the US and other countries. The cost of the legal requirements gets incorporated into the price as well. So even when something looks like an apples to apples comparison it’s not quite as simple as it seems.
I think, as I’m reading in reputable US financial media, that as the US economy slows, (as it’s showing signs of doing now) almost all tariffs will fall away with the remaining one being a 10% on all imported goods. And it will be the status quo for the foreseeable future. Many of us will have made personal decisions on whether to buy new gear, travel to attractive photo destinations, or keep using what we have based upon a myriad of personal circumstances. As Viper 699, said, I can’t worry about what I can’t control, so I’m going out to shoot some ospreys.
Unscript
Active member
Those are completely different things.
The VAT, as I think was explained before, is similar to the US sales tax, though it percolates up and down through the whole system (so the US has already joined the club). It impacts the consumer, while the tariffs impact the imported goods for everybody. So they're targeting a different audience, but more importantly, one is a local and applies to all end products while the other makes anything produced aboard less competitive.
I have not heard this to be the case. Maybe offset of other VAT which makes sense as you pay on all transactions as an entity.
I think of it this way - in the US someone selling a lens has paid zero sales or use tax when they sell it the consumer. They have no COGS for VAT. In a VAT scenario there is a COGS paid. Assuming the same rate and same dollar sale, how are these the same. 4000 lens at 10% VAT or Sales Tax means 400 collected from the end consumer. But in the US the retailer paid out 0 and in the VAT country lets say they paid out 2000 @10% or 200. How is that the same?
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