Brexit, the economy and house prices part 5

Filo25

Graham_Devon wrote: »

The highest sales tax in the the US states is 9.5%. Some states don't charge any sales tax at all.

If we strip out VAT, then it comes to £144. Comparable to the US. But as we cannot avoid VAT, and it is an EU law, it's useful to compare prices, sure, but again, shows how, as we are in the EU, we pay more than those across the water for the same product.

Not suggesting at all here that if we came out of the EU, we wouldn't pay a sales tax. But at the moment we cannot reduce VAT any lower than 17%.

The overarching point here though is to make the point that all this stuff about things costing us more due to costs of trading with the UK isn't all it seems to be. It appears to be yet more scaremongering.... we have a world of information at our fingertips to show, factually, it's not neccesarily the case that things will cost us more. And with the ability to change out taxes, it could (and I say that in a technical way as I don't believe it would happen) cost us less to buy the same item as it does now.

We aren't cutting VAT whether we stay in or leave the EU, over the very long term the path has been towards higher rather than lower indirect taxes, basically governments feel it is less visible than direct income tax so the burden has moved in that direction for political reasons.

As you say we could cut to 17% within the EU if we wanted to, but we haven't because we don't want to, so it is a pretty meaningless "restriction".

gfplux

Filo25 wrote: »

I have sympathy with that view as well, it is never pretty when people feel let down by the democratic process, the conduct of the referendum by both sides really did British democracy no credit at all,

The problem was that people were sold a line that breaking free of all things EU would be pretty much economically painless, as they needed us more than we needed them, unfortunately that was as much nonsense as some of Osborne's more hyperbolic statements on areas like having an emergency budget..

People were genuinely led to believe the could have all or nearly all of the economic benefits of the EU with none of the obligations and I think a lot still believe that so they just think they are being let down by a weak government which is selling then out, not helped by some more irresponsible politicians and journalists continuing to bluster in this manner.

The reality of exit negotiation is looking a bit different however.

If a majority of people genuinely are happy to pay the economic (and potential security in N Ireland) price to get the hardest of hard Brexit then from my point of view sadly that is probably what we should be doing, I don;'t think that is the case though, plus no government wants to be seen as being responsible for willingly starting a recession, that tends to have political consequences.

Realistically whatever the outcome I think a lot of people are going to end up feeling let down, and the political fallout will carry on for years to come, that is the problem with offering the public something that seemingly can't be delivered.

While I agree with most of the post I feel you have missed one important point.
From what I read, hear and see in this thread many many Brexiters blame the EU for the present negotiating difficulties.
The finger of blame is being pointing at Brussels not Westminster.

Actually a poster has repeated this since your original post and my reply.

gfplux

Filo25 wrote: »

We aren't cutting VAT whether we stay in or leave the EU, over the very long term the path has been towards higher rather than lower indirect taxes, basically governments feel it is less visible than direct income tax so the burden has moved in that direction for political reasons.

As you say we could cut to 17% within the EU if we wanted to, but we haven't because we don't want to, so it is a pretty meaningless "restriction".

But but but but, I thought Brexit would ALLOW Britain to reduce or even abolish VAT.

iro

gfplux wrote: »

While I agree with most of the post I feel you have missed one important point.
From what I read, hear and see in this thread many many Brexiters blame the EU for the present negotiating difficulties.
The finger of blame is being pointing at Brussels not Westminster.

This is why HMG cannot lose, everyone blames the EU and the worse it gets the more the EU gets blamed.

It was amusing to see Barnier's petulant reaction 'dont blame the EU!'

:rotfl:

The great fear was that at some point a Government would rejoin the EU, it is really important that we continue to blame the EU (along with encouraging our populist allies in Europe) to do the same thing..

There needs to be maximum ill feeling on both sides, the EU are of course with their attitude simply ensuring this happens.

:rotfl:

Arklight

iro wrote: »

This is why HMG cannot lose, everyone blames the EU and the worse it gets the more the EU gets blamed.

It was amusing to see Barnier's petulant reaction 'dont blame the EU!'

:rotfl:

The great fear was that at some point a Government would rejoin the EU, it is really important that we continue to blame the EU (along with encouraging our populist allies in Europe) to do the same thing..

There needs to be maximum ill feeling on both sides, the EU are of course with their attitude simply ensuring this happens.

:rotfl:

HMG certainly can lose, and I can assure you that 'everyone' isn't going to be blaming the EU for their failure.

This is another reason why the Brexit you want isn't going to happen. The transitional stage already is likely to last years. Considering the age of the people who voted for Brexit, it's quite possible 30% or more wont live to see it happen on paper.

iro

Arklight wrote: »

HMG certainly can lose, and I can assure you that 'everyone' isn't going to be blaming the EU for their failure.

This is another reason why the Brexit you want isn't going to happen. The transitional stage already is likely to last years. Considering the age of the people who voted for Brexit, it's quite possible 30% or more wont live to see it happen on paper.

Over 400 constituencies voted leave this is the inconvenient truth for EUphiles in their Metropolitan echochambers.

The other 'inconvenient truth' is that the MEP elections in 2019 are very likely to deliver a populist, eurosceptic majority (with or without the UK).

Who knows if the EU starts to be tough on uncontrolled economic migration some of the leavers might start to be less critical of the EU .

Good to see we are having another day of 'Brexit weather' today, sunny, warm optimistic and a garden rich in fecundity.

Arklight

Graham_Devon wrote: »

Can you explain why that doesn't happen when you look at VW in America then?

There are additional costs there. Yet they pay less, for more when it comes to VW vehicles.

Passat S UK = £22,195
Passat S US = $22,995 (£17,166)

They also get a higher specification S model (for instance, they get active return steering in the base model). Plus double the warranty length.

Going on your statement, they should be paying, what, $32,000 - 34000 for the same thing?

Cars are much cheaper in America anyway. If they charge much more than that they won’t sell any.

I always think it’s incredibly unfair when I go there than I could get a new car in dollars there for the price of the second hand version in pounds here, with no money down and almost 0% finance.

Sales tax isn’t quoted but this can be 0% to only a few % depending on state. Unless there are some hidden charges somewhere we really are being royally shafted on automobiles in the UK. And I should remind you Graham, that the only reason that cars in the UK are as 'cheap' as the are is thanks to Brits realising how much less they cost in France, importing them, then fighting the manufacturers who wanted to stop them, and winning under EU law.

So think on.

vivatifosi

On the subject of pricing in the US vs UK vs Europe, there are a whole bunch of reasons why prices are lower in the US, including:

Sales tax is added on to the price shown as it varies by county within states.
Economies of scale
Rates only applying to the contiguous 48 states, with higher prices in Alaska and Hawaii, significantly so in the case of the latter due to remoteness and shipping costs
Availability of cheap retail space make it a much lower overhead
Different materials used to make the "same" product, a friend bought a BMW from Germany and shipped it over as he said the build quality was better than US ones
More conspicuous consumption means more units sold means the cost price per unit falls.

In terms of Ikea, they are a major company and will by products from all over, including the Far East and Europe. Softwood products often come from the Baltics as there are vast forests there. Some more designer elements come from Sweden or Italy, and of course much comes from China.

I was pricing up a sofa bed yesterday to furnish an apartment in Spain. The model I looked at was cheapest in Euros, then in pounds. It was not cheaper in the US, possibly because it was a large unit made in Europe, possibly because more units are sold in Europe than in the US. However as Ikea is a value retailer with a sophisticated business model, they will be making decisions like that on virtually every product. It won't simply be the case that the price for every item will be out by the same amount.

Finally when Ikea moved into the US it discovered that it needed to tailor its offering to local markets, e.g. larger glasses and plates. When they first opened, the story goes that they couldn't work out why people were buying one of their vases in lots of six, then they found they were buying them as glasses.

cogito

iro wrote: »

Over 400 constituencies voted leave this is the inconvenient truth for EUphiles in their Metropolitan echochambers.

The other 'inconvenient truth' is that the MEP elections in 2019 are very likely to deliver a populist, eurosceptic majority (with or without the UK).

Who knows if the EU starts to be tough on uncontrolled economic migration some of the leavers might start to be less critical of the EU .

Good to see we are having another day of 'Brexit weather' today, sunny, warm optimistic and a garden rich in fecundity.

It's far from likely that there will be a majority of Eurosceptic MEPs in the next elections as the EU are busy stacking the odds in favour of established parties.

Rinoa

HAMISH_MCTAVISH wrote: »

Regardless if the bill to British business is £14 billion or £20 billion, the additional costs of EU businesses doing business into the UK will be passed on to their UK customers anyway....

So, if British business sells to UK customers they would immediately have a cost advantage over their EU rivals. Good.

Seriously, has it occurred to you that when these figures are announced it's always a big round number.
We now know the figures were hopelessly wrong anyway (which makes wonder what else they miscalculated) but HMRC, after carefully analysing the cost of billions of transactions yearly, came up with a sum of precisely £20Bn.

Wow. What are the chances of that happening?