Buying Local

[Sebrof]

Sebrof - how is the VAT collected on purchase of goods costing £18.50? Doesn't the online retailer charge this and it gets credited so the import VAT is prepaid? Is requiring a change in an online ecommerce transaction 'not worth the effort' - do you really think would it cost more to collect that it would raise in revenue? (how much do you think the marginal extra cost is for charging VAT in an online transaction?).

 

I've never seen cost of collection mentioned as a reason for not closing the CD DVD Jersey loophole - rather it seemed the reason given in 2007 (after much delays) was to support Jersey growing online distribution industry. (i.e. the big retailers who've set up distribution operations there).

 

BTW - pongo is right - it hurts UK retailers just as much - at least the smaller domestic ones who haven't set up an offshore distribution centre. So what's the benefit, and why hasn't the UK closed this loophole? It sounds cynical but I can only think it is to support the big retailers who have set up online distribution in Jersey - giving them 'a useful competitive advantage'.

 

 

Skeddan, there was once a time, long ago, when the Internet didn't exist. The rule was brought in for physical goods, not for downloads, but it's one rule for all.

 

S

[Sebrof]

I don't see how the VAT loophole on CDs and stuff affects IOM retailers any differently from how it would affect UK retailers.

 

Meanwhile - I'm totally in favour of buying local product (eg food) whenever it is possible. But when it comes to buying imports I see very little difference between keeping a shop in business or keeping the courier services and Post Office in business. And (with the obvious exception of stuff which is affected by this VAT loophole) - the IOM is getting the VAT back anyhow AFAIK.

 

I'm prepared to be wrong though. I'm certainly interested in supporting a local economy.

 

Personally I would far rather see local shops kept in business, even if it does mean paying a few pence more for some local produce.

 

For some people - especially older citizens who can't drive to the supermarket the local shop is their 'cultural center' - it's a place they might visit two or three times a day, catch up with their friends, have a bit of a gossip and pick up their groceries etc.

 

If the local shop goes, what happens to the rest of the community that don't have the means to drive, don't have the strength to carry a bunch of shopping bags home on the bus from a supermarket?

 

The whole 'buying local' thing for me isn't just about supporting farmers, flour mills, suppliers, distributors - it's about supporting the whole community.

 

Good post. I'm glad to see some people on the island can see further than their own noses.

 

S

[Skeddan]

Skeddan, there was once a time, long ago, when the Internet didn't exist. The rule was brought in for physical goods, not for downloads, but it's one rule for all.

Erm - yes I know that, but use of this loophole by Jersey for CDs and DVDs has been a controversial issue for at least the past four years and the UK government decided not to change the rules to close this loophole last year.

 

Sebrof - I didn't say the rule applies to downloads.

 

CD's and DVDs costing less than £18 can be sold without VAT using this - it's an easy loophole to close, its a major one, it's something that the government are very aware of, it gives an unfair competitive advantage due only to the tax loophole, and rules and laws often change to catch up with the times.

 

Are you saying that not changing the rule is justified and explained by the fact it was brought in a long time ago... or 'one rule for all'?

 

VAT rules in the UK are certainly not 'one rule for all'. Gingerbread men with chocolate decoration are treated differently according to whether they only have a small amount of chocolate used for the eyes, or a greater amount. Roasted and salted nuts are treated differently from shelled nuts. DVDs and CDs could easily be exempted from the £18 rule - so why not given all the stink made over this?

 

The only reason I can see for keeping this loophole is because, as you say, "it provides a useful competitive advantage" - to the big retailers who have distribution centres in Jersey.

[Sebrof]

Skeddan, there was once a time, long ago, when the Internet didn't exist. The rule was brought in for physical goods, not for downloads, but it's one rule for all.

Erm - yes I know that, but use of this loophole by Jersey for CDs and DVDs has been a controversial issue for at least the past four years and the UK government decided not to change the rules to close this loophole last year.

 

Sebrof - I didn't say the rule applies to downloads.

 

CD's and DVDs costing less than £18 can be sold without VAT using this - it's an easy loophole to close, its a major one, it's something that the government are very aware of, it gives an unfair competitive advantage due only to the tax loophole, and rules and laws often change to catch up with the times.

 

Are you saying that not changing the rule is justified and explained by the fact it was brought in a long time ago... or 'one rule for all'?

 

VAT rules in the UK are certainly not 'one rule for all'. Gingerbread men with chocolate decoration are treated differently according to whether they only have a small amount of chocolate used for the eyes, or a greater amount. Roasted and salted nuts are treated differently from shelled nuts. DVDs and CDs could easily be exempted from the £18 rule - so why not given all the stink made over this?

 

The only reason I can see for keeping this loophole is because, as you say, "it provides a useful competitive advantage" - to the big retailers who have distribution centres in Jersey.

 

Skeddan, in your usual way you are worrying a small issue to death. I have explained why this concession (not a "loophole") exists - it was for low-value parcels where the VAT collected would be less than the cost of collection.

 

Obviously they could have a different rule for physical and non-physical imports, but VAT is already enormously (and unnecessarily) complex and I for one am glad that HMRC have not bothered with creating yet another exception. There are much bigger injustices in the world than this, and the VAT people have much bigger things, like carousel fraud, to worry about.

 

Having said that, if Amazon now has an operation in Jersey, then the amounts of money involved will be starting to become significant, and perhaps HMRC WILL look at withdrawing the concession for businesses - assuming they can find a way to collect the VAT economically.

 

S

[WTF]

i couldn't be arsed to trawl through the whole thread ( it seemed to grow quicker than the KSF one ) but buying local goods really means meat,veg,bread and milk. everything else is imported to be sold here anyway. most meat due to the import laws is local, milk too is usually local, not all bread is, but i use RB white and healthy anyway, veg being the only ? really. if you want local use a farm shop or farmers market ( if they still happen ) it may have a bit of soil on it and not be in a styrene tray with shrink wrap, but a wash will sort all that. the annoying thing is that it is the nmiddle men that put the price of food up. the farmer gets less for milk now than he did ten years ago, but it costs us more than it did a week ago. milk is still a value product, bottled water costs more, but the 'farmer' isn't the guy getting rich off it.

[Skeddan]

I have explained why this concession (not a "loophole") exists - it was for low-value parcels where the VAT collected would be less than the cost of collection.

Which is a bullshit answer - because cost of collection of VAT would be minimal - as I pointed out. UK revenue lost may be as much as £200m p.a. to say nothing of damage to domestic retailers.

 

The real answer for why this still exists seems to be that this was an EU regulation introduced in the early 80's, and changing this would mean either all member states getting together and agreeing a change, or the UK having a derogation from this. Because it is an EU regulation, changing this to bring it up to date would be like wading through toffee - hence the law on this is highly unresponsive. So when get to the bottom of it, it's not the cost of collection, it's the time cost and difficulty of changing EU regulations. I'd think there's a few lessons to be learned in that.

 

And yes, as you see it I might 'worry it to death' - because in my 'usual way' I'm not content with lazy ill-thought-out uninformed bogus bullshit 'explanations' - the kind which you seem quite content with in your usual way.

[Amadeus]

I don't mind buying certain things locally, even if I might be able to get them cheaper online. The deciding factor is usually the service offered by the shop - friendly and knowledgeable staff and good service are more important than a few quid saved - that's mostly for electronics stuff, though, like cameras, etc. When it comes to food, I'm afraid price is the main factor at the moment - cheap wins.

[Sebrof]

I have explained why this concession (not a "loophole") exists - it was for low-value parcels where the VAT collected would be less than the cost of collection.

Which is a bullshit answer - because cost of collection of VAT would be minimal - as I pointed out. UK revenue lost may be as much as £200m p.a. to say nothing of damage to domestic retailers.

 

The real answer for why this still exists seems to be that this was an EU regulation introduced in the early 80's, and changing this would mean either all member states getting together and agreeing a change, or the UK having a derogation from this. Because it is an EU regulation, changing this to bring it up to date would be like wading through toffee - hence the law on this is highly unresponsive. So when get to the bottom of it, it's not the cost of collection, it's the time cost and difficulty of changing EU regulations. I'd think there's a few lessons to be learned in that.

 

And yes, as you see it I might 'worry it to death' - because in my 'usual way' I'm not content with lazy ill-thought-out uninformed bogus bullshit 'explanations' - the kind which you seem quite content with in your usual way.

 

I touched a raw nerve there, it seems.

 

Skeddan, you are confusing who with why. The concession was introduced because it wasn't worth the trouble/cost of collecting VAT on small parcels. And it's still there because probably it still makes sense.

 

The IOM, with its population of 80,000 people, has secured changes to VAT rules (for instance on B&B and building), so I would expect that HMRC could unilaterally remove this concession if it wished. Or change European minds if it thought it worthwhile to do so.

 

Let us say that the average small parcel has a value of at least £5:00 including carriage (which is also VATable). That works out at an average of £11.50, on which the VAT would be £2.01 (say £2.00). If you really think that a bureaucratic operation like the PO could collect and account for VAT at a materially lower cost than £2.00, then we are again going to have to agree to disagree. (It would have to be materially lower so that there was a net gain to HMRC.)

 

Now if HMRC could somehow find a way to prevent large companies like Amazon from utilising this concession - perhaps by making them pay over the VAT once a month for parcels despatched, rather than letting the PO collect the VAT when the parcel arrives, then there might be an argument for a change to the rules.

 

But don't hold your breath.

 

And lighten up a little. I'm not going to be drawn into a slanging match with you. Manners on this forum are bad enough already without you and I adding to the problem.

 

Cheers

 

S

[MarcusAurelius]

Manners on this forum are bad enough already without you and I adding to the problem.

 

Cheers

 

S

 

Indeed they are.It is a little sad that you can't spread a little knowledge or enquire about certain things without people talking down to you.

 

Off to Shoprite now , to support our local manx businesses Yessir

[Skeddan]

Skeddan, you are confusing who with why. The concession was introduced because it wasn't worth the trouble/cost of collecting VAT on small parcels. And it's still there because probably it still makes sense.

 

The IOM, with its population of 80,000 people, has secured changes to VAT rules (for instance on B&B and building), so I would expect that HMRC could unilaterally remove this concession if it wished. Or change European minds if it thought it worthwhile to do so.

 

Let us say that the average small parcel has a value of at least £5:00 including carriage (which is also VATable). That works out at an average of £11.50, on which the VAT would be £2.01 (say £2.00). If you really think that a bureaucratic operation like the PO could collect and account for VAT at a materially lower cost than £2.00, then we are again going to have to agree to disagree. (It would have to be materially lower so that there was a net gain to HMRC.)

 

Now if HMRC could somehow find a way to prevent large companies like Amazon from utilising this concession - perhaps by making them pay over the VAT once a month for parcels despatched, rather than letting the PO collect the VAT when the parcel arrives, then there might be an argument for a change to the rules.

Let's be clear - you were saying the 'concession' (which over time has become a loophole) exists because it is uneconomic to collect. From what I gather this wasn't even the original reason for this EU regulation. Regardless of why it was originally introduced, the reason it exists today is that it is difficult to change or derogate from EU regulations.

 

It wouldn't 'not be worth the trouble/cost' today. First off there is no reason why customs & excise or PO as agents should not charge an admin fee for processing VAT on imports - £2 or whatever reflects the cost (They do that in NZ). The buyer would then find that buying from Jersey would not necessarily be cheaper - if anything more expensive. Of course the Jersey distributors would not like this - better that they arrange to charge the VAT at time of purchase and remit this as you suggest - but up to them whether or not to do this. Isn't that what they do anyway for purchases which cost over £18 - e.g. £18.50. They might still sell cheaper because of economies of scale and purchase power/discounts, but there would not be the loss of revenue as at present.

 

Based on rough figures from the UK, the total cost to the IoM treasury of this loophole could be about £0.5m p.a. (not just VAT, but also loss of tax on profits of traders, lost revenue from multiplier effects of these earnings etc.). Not a huge amount, but every bit counts - this would pay half the amount the government contributes to Manx Radio. Ignoring all the small leaks and not minding the 'pennies' usually leads to leakage of sizeable bucketfuls of cash.

 

If IoMG could change this in the agreement - as per B&B - then that might be a way forward to get a level playing field and deal with this unfair competitive advantage.

 

(Sebrof - I'm not interested in slanging match either - but comments which appear as ad hominem attack to 'talk down' fair points which challenge a propounded 'truth' do hit a raw nerve. I'm sorry if I took what seemed to be a put down by you in the wrong way, and very glad you prefer sensible discussion over petty point scoring and put downs. )

 

Anyway, there's more to 'buying local' than Jersey VAT, and probably more than enough has been said on that topic - but I wish MarcusAurelius all best in running his business in face of this disadvantage.

[Slim]

Indeed they are.It is a little sad that you can't spread a little knowledge or enquire about certain things without people talking down to you.

 

Off to Shoprite now , to support our local manx businesses Yessir

 

Problem is you were spreading incorrect knowledge, and not enquiring about anything. As a shopowner that's really not on.

[keyboarder]

Off to Shoprite now , to support our local manx businesses Yessir

 

Shoprite are barely more manx than Tesco.

[Skeddan]

When it comes to food, I'm afraid price is the main factor at the moment - cheap wins.

'Cheap wins' could turn out to be a false economy. At least 25% of Manx domestic waste is unused food. In the UK the average adult throws away £35 worth of food a month. The average spend on food and drink is £150 per month. So it would seem that about 25% or more of value of food paid for is being thrown away. Overall this means food costs the average 'wasteful' consumer at least 30% more than would otherwise be spent to get the same but with no waste.

 

As I noted in the thread on recycling, it's likely that a big factor is purchasing perishables from supermarkets in infrequent big-stock up shopping expeditions. A lower shelf price at the supermarket could then turn out to be a false economy - the veges and other perishables which typically get thrown away as unused food may be a few pence cheaper, but in reality you may end up paying perhaps 50% more for these than the shelf price would indicate (perishables being only a proportion of the total spend).

 

You can look at it from the large supermarkets point of view. Their large out-of-town stores encourage occasional olympic shopping and over-stocking, and store layout encourages purchases of perishables. They can have lower prices because this gets higher market share, and they gain higher spends and increased volume (and higher profits) through excess 'waste' purchases of perishables in their megastores. Also while shoppers might be attracted by cheap prices on offer and think they are getting cheaper, many 'upscale' to more expensive higher graded produce which is no cheaper at all. Part of their edge is because their shoppers are also buying for their dustbins as well as for themselves. (note the price differential in perishables in the local and metro stores).

 

IMO fresh, local and buy-as-you need wins for short-shelf-life perishables, even if the shelf price is a little bit higher. Ideally from the kind of small high quality shops and stalls that one still find in local communities in some places. Unless you are an obsessive-compulsive shopper who carefully pre-plans every major shopping expedition and freshness is not important, this will IMO win every time for perishables. As well as the direct benefit of being more economical in the long run, and better quality, there are also the indirect but also important benefits that Matty touched on (local community, domestic economy, and also savings in waste disposal etc.).

 

So, even though counter-intuitive, 'cheap wins' for many perishables purchased in mega supermarkets turns out to be a false economy. 'Buy local' is very much better if it translates into smaller more frequent purchases of fresh perishable produce which is good quality - both locally sourced and imported.

[Invigilator]

A question. Why does cheese from the IOM cost less in England than in the Island? I regularly buy IOM cheddar here in Northampton at half the price than it is in Shoprite. When we visit the IOM we always expect to pay a more for our food but this seemed to be an anomaly.

 

p.s. My kids love IOM cheddar.

[Onchanguy]

My criteria are quality first, and provenance second. Price comes well third.

 

All I can say is that it must be nice to be able to afford that luxury. I'm currently very skint, in future I'm likely to be even more skint the way our offshore economy looks to have been f**ked up last week. I think huge numbers of people are in the same boat and therefore I really couldn't care. Price is top of my criteria everything else is second really.

 

Quality is not the same as expensive or extravagant. Nor just about what tastes nice - though that is important. It's also about what's good for you. I seldom buy ready meals or any other sort of processed food. Raw, simple and natural is what I go for. People who buy cheap ready-meals probably spend more money, but get less value. And less pleasure.

 

S

 

All I can assume then is that some people prefer to live in fantasy land.

 

I have 3 teenage kids, we don't buy ready meals or the other rubbish you cynically suggested we might but for 2 adults and 3 mid to late teenage kids our shopping bill is £750 a month. Thats one weeks wages to me. I'm sure loads of people are in the same boat so forgive me for not wanting to put price third.

 

I think most people with families make the same decisions and as L200 says I've never met a poor farmer so if you want to voluntarily pay over the odds because you choose to that's your perogative. I do, however, think that as this thread expands most people are likely to agree that its cost that drives your buying habits no matter how you want to dress it up and in a recession costs get even more of an issue.

 

Evidently you don't need to worry about price as much as others. £750.00 is more than two weeks wages for a lot of people, myself included, so forgive us paupers if we put price above all else.

 

Presumably your partner/spouse is also working so you don't have to worry about price as much as me as a single person on less than half your wages. Granted I don't have a family to pay for but that is both our choices but I still have bills such as rent, electricity etc. to pay for.

 

I'm sure a lot of people would support local businesses if they could afford it and the quality was there. As has been mentioned on this thread Ramsey Bakery bread is $h1te and 57p for a pint of milk is just extortionate.

 

If the local farmers got together and formed a co-operative and sold meat and veg in a shop they ran they could bring the retail price down by not going through third parties and people would buy the local produce as it would be fresher and better than you buy in supermarkets and hey ho everyone is happy. The farmers would get more money as they would get the full sale price rather than the middleman, the customer would get better produce and the economy would benefit because people would buy locally.

 

Not difficult. Just takes someone to get the ball rolling, but no, the farmers would rather maintain the status quo and keep whinging about how bad the life is. My heart bleeds. If they are not prepared to do something about it then I am not prepared to take any notice of their complaints.