Is there a tipping policy or expectation in London? Restaurants, Taxi, Hotel staff? Thanks.
Is there a tipping policy or expectation in London? Restaurants, Taxi, Hotel staff? Thanks.
>>>But there is a very real feeling here that many visitors do not adapt their behaviour to suit the country that they are visiting<<<
Summed it up in a nutshell RB.
"When in Rome..." I believe is the bottom line.
Should one feel the need to go beyond this, there's no need to seek mass approval or disapproval. Live and learn for yourself.
Sarah-in the UK advertised prices virtually always include VAT. The menu price for your pizza is what you get charged, no taxes added. On my last visit to NYC I seemed to have several different taxes added to the advertised hotel/shop price, which is much more annoying IMO.
How do you think your sales tax differs from our VAT? Aren't they both a tax on consumption?
Sales tax and VAT vary in a few different ways - here it is in a nutshell (and I am certainly no expert on VAT):
-Sales tax is entirely dependent upon the state, county, and city you are in. There is no national sales tax in the US (unlike VAT which is national). That's why visitors can't collect sales tax back when exiting the US. I can be in a state that doesn't charge sales tax at all (Oregon) or I can be in a state that charges 6% sales tax (Georgia) or in a city in that state that charges an extra 1 or 2% (Atlanta). Because it varies so widely, sales prices virtually never include the tax - it's added on top at the cash register. I live on a county line - on one side of the line my sales tax rate is about 9% (very high), and on the other side it's 6%. Guess where I shop....
-This isn't relevant to restaurants, but online purchases have weird sales tax rules in the US. If the merchant does not have a physical store in the state where the item is being shipped to, then the merchant doesn't have to charge sales tax to that customer. This is the #1 reason why Amazon.com made it big. I'm not sure if VAT is charged on online purchases in the UK, but if it is then there is a 20% surcharge that UK residents pay which American residents avoid for similar items.
-VAT is 20% - so even if the prices listed includes VAT, the merchants still have to take that 20% charge into account when giving the customer a list price. That's probably why Americans view everything in London as being so expensive... The customer is paying that 20% VAT one way or the other - it just sounds like UK merchants bump up the list price rather than tacking it on at the end like we do. But make no mistake: you ARE paying for it, and it IS a tax that is added to your goods and services. You just don't get to see how it breaks down (and because I live in variable sales tax world, that would bother me a lot).
-Being a bit pedantic here, consumption taxes in Europe have an amorphous "value added" calculation - somebody somewhere decided that if every person/business in the chain of production were to pay tax on the goods at each step along the way, the government would get about 20% of the final product's value. So in a pure consumption tax structure, the tax is passed along the chain of production until you get to the consumer, who pays the entire thing at the very end. That is great for businesses, but it hits the consumer hard. In the US, sales tax is typically charged at each point of sale, no matter how many there are. So businesses pay sales tax when buying goods from suppliers, retailers pay sales tax on goods from wholesalers, etc. It's a bit more evenly distributed, and the consumer pays a smaller percentage of the final tax the government collects at the end. I had a hard time wrapping my head around consumption tax when studying it in law school. Nobody could ever explain to me how the European governments concluded that 20% was the correct figure. Theoretically, it should vary for every good sold - because buying apples from a farmer who grows them has only one point of sale, but buying a computer from a retailer might have a dozen points of sale before it actually makes it to the consumer. Yet somehow 20% became the go-to number for everything.
-Sales tax rates in the US are typically less than 10% for most states. It's not a hard and fast rule, but I'd say 10% is pretty high on average.
-Services are typically not taxed in the same way as goods in the US. I have to talk in generalities here because it can vary so wildly, but what you probably paid in NYC was a hotel tax, rather than a true sales tax. Disclaimer: I don't know if NYC has a hotel tax, but many major metropolitan cities do. My point is that while VAT typically includes a tax on services also, most services in the US aren't taxed the same way as goods (if at all).
There it is in a nutshell.
And again, that's just state tax - the US federal tax code takes up several feet of space on my bookshelf! This is why tax reform will never happen here.
> Theoretically, it should vary for every good sold - because buying apples from a farmer who grows them has only one point of sale, but buying a computer from a retailer might have a dozen points of sale before it actually makes it to the consumer. Yet somehow 20% became the go-to number for everything.
Apples are zero-rated for VAT. Just sayin'.
Yes I know that apples aren't charged VAT. It's simply an example - because how is the government to know that there were a dozen points of sale in the manufacturing of a good versus only one or two? In a pure consumption tax scheme, the tax should change depending on how many points of sale there are. And frankly, it would provide a huge incentive to buy local - because there wouldn't be as many points of sale that have been taxed. Yet, European governments typically charge the same rate for everything, regardless of how many people or businesses were involved in the manufacturing process.
As far as I know there is no European country that really follows the consumption model correctly. I suppose it would too hard to pass along to the consumer what the actual tax ought to be under the system, and it's easier to just stick the same percentage on everything. And I suspect that many consumers pay more than what they would actually pay if the governments followed the model accurately.
So you deliberately chose an example that didn't fit your own argument to support your argument?
And a consumption model of taxation - that's why you have a tipping culture in the USA and the UK doesn't?
Sarah. I believe that in NYC I paid two different sales taxes (state & City), a hotel occupancy tax , and a flat fee per unit.
The total comes to 14.625% of the cost plus $2 per day flat fee. Whilst I accept that this is less than our 20% it is definitely a tax on services and if I may say so a rather a complicated one.
I think your version of a'nutshell' may vary from mine. Incidentally you are incorrect about 20% being the 'go to' number. It varies across countries and most countries have some variable rates depending on the goods/ services concerned. The UK general rate of VAT only moved from 17.5% to 20% in 2011. Luxembourg is only 15%, Finland is 24% ( high tax country but excellent public services).
I am of of course aware that I am paying it; nobody is fooled into thinking that the tax doesn't exist but I have never heard anyone in Europe express a wish to have several tax rates applied at the checkout.
It's easy to understand how and why the government decides to raise VAT from say 17.5 % to 20%
Less people in work less income tax take
Need to stop spending overheating the economy
Reduce individuals disposable income
No UK govt will raise income tax rates
Need to raise additional revenue to meet expenditure
Only one way then
Tax consumption not income
There you have it in a nutshell SarahEdited: 05 September 2013, 19:25
Sarah: "As far as I know there is no European country that really follows the consumption model correctly. "
That's because VAT isn't a tax on consumption, it's a tax on supply, and it's irrespective whether the supply is goods or services. Certain things are specifically excluded from the scope of the Sixth Directive (such as the supply of financial services), and others are within the scope of national discretion to be VATable at 0% (such as children's clothes in the UK).
Given that you yourself said you don't understand it, it was perhaps a little foolish to attempt a direct comparison with a fragmented tax on sales as used in the US.
darrenmcc, if that's how you understand it then I suppose I stand corrected. All I can tell you is that my tax law books agree with what I have said. The two basic questions of any tax are what are its basis and what is the trigger. The basis of a pure VAT is the difference in the value added at each stage of production. So I make a pair of pants for $50 and them sell them for $60. The basis for the tax is the $10 "value added." And so on and so forth. The VAT is a consumption tax because the trigger is "consumption" - or the final purchase of the good.
If you read my post carefully, you would see that I the thing I "didn't understand" was how the various European governments settled on their final VAT rates. Because under a pure VAT the rates should be different for different kinds of products, services, etc. I think Leuca answered that one for me: politics, as ever.
Brittraveller simply asked me if US sales tax and VAT weren't basically the same - and I explained some basic differences. Without getting into it too much the primary difference has to do with the basis, rather than the trigger. As I said at the beginning I am not a VAT expert. Nor am I a sales tax expert. But I answered the question as well as I could. If you still think I'm "foolish," well then please chalk it up to yet another foolish American attempting to answer questions on the UK board. Perhaps we should just leave it up to the experts, eh?
Brittraveler, I certainly sympathize with all the different taxes you had to pay. The American system is horribly complex, and even people who live here never really know what they're going to get when they cross a state line. I'm not surprised that NYC charges state, local, and occupancy tax on hotels. That's a mini-big-government in itself up there that they have to support!
It may be of interest to you that federal legislators in the US have toyed with the idea of replacing the American capital gains tax with a consumption tax (a general one, not a VAT of course). I'm all for it, but I would be surprised if we ever make it there. That would require them to re-write at least 10 inches of the several feet of federal tax law I have on my bookshelf :) And I would be even more surprised if we ever implemented a federal VAT. I think that would start round 2 of the American Revolution.
On that note, I'm going to rest. I'll leave it up to the VAT experts to answer any further questions so that I don't continue ruffling feathers. I'm sure to be asking questions myself for our approaching trip, and I certainly don't want to be "that girl" on the forum.