Speaking in Brussels today, Mr O'Leary said he wants to 'create an opportunity' by making people realise they are 'no longer going to have cheap holidays'.
He told an audience of airline leaders: 'I think it's in our interests - not for a long period of time - that the aircraft are grounded.
Carsten Spohr, the boss of German carrier Lufthansa, backed the threat, saying: 'In theory, if we could use this industry to prove to the British how wrong the decision was, that might be a good thing.'
EasyJet chief executive Johan Lundgren, who was on stage alongside Mr O'Leary, interrupted him to say: 'If you start grounding your planes, I'm flying.'
Anything imported gets whacked with the full rate of VAT when it gets sold here. Anything exported gets no VAT when its exported.
It's a tax that is applied to imports but not to exports.
Of course it is a consumption tax that also hits domestic production (exc exports) etc too and only loosely hits imports but that's why I said "sort of".
Yes, but that's also true of sales taxes levied by US states. It's applied to domestic consumption, not exports.
Indeed, I'd go further, and say that because VAT is charged on the products in the supply chain of an exported product, it contains an element - probably a substantial element - of VAT in the price, while a sales tax explicitly falls only on consumers.
Anything imported gets whacked with the full rate of VAT when it gets sold here. Anything exported gets no VAT when its exported.
It's a tax that is applied to imports but not to exports.
Of course it is a consumption tax that also hits domestic production (exc exports) etc too and only loosely hits imports but that's why I said "sort of".
Yes, but that's also true of sales taxes levied by US states. It's applied to domestic consumption, not exports.
Indeed, I'd go further, and say that because VAT is charged on the products in the supply chain of an exported product, it contains an element - probably a substantial element - of VAT in the price, while a sales tax explicitly falls only on consumers.
Yes that's true of sales taxes though sales taxes in the USA are considerably lower than VAT in the UK or the rest of Europe. Looking at each State the highest average State and Local Sales Tax combined in the USA is less than 10% and the average combined rate is between 6-7%
As for the supply chain that's not true is it? While VAT is levied through the chain, VAT registered companies are permitted to reclaim all VAT they've spent and that can be over 100% of what they've taken meaning that HMRC pays the company a net VAT refund.
The exporter if they're VAT-registered (and would be crazy not to be if a serious exporter) gets to reclaim the supply-chain VAT meaning it was exported with no VAT on the product.
Anything imported gets whacked with the full rate of VAT when it gets sold here. Anything exported gets no VAT when its exported.
It's a tax that is applied to imports but not to exports.
Of course it is a consumption tax that also hits domestic production (exc exports) etc too and only loosely hits imports but that's why I said "sort of".
Yes, but that's also true of sales taxes levied by US states. It's applied to domestic consumption, not exports.
Indeed, I'd go further, and say that because VAT is charged on the products in the supply chain of an exported product, it contains an element - probably a substantial element - of VAT in the price, while a sales tax explicitly falls only on consumers.
Yes that's true of sales taxes though sales taxes in the USA are considerably lower than VAT in the UK or the rest of Europe. Looking at each State the highest average State and Local Sales Tax combined in the USA is less than 10% and the average combined rate is between 6-7%
As for the supply chain that's not true is it? While VAT is levied through the chain, VAT registered companies are permitted to reclaim all VAT they've spent and that can be over 100% of what they've taken meaning that HMRC pays the company a net VAT refund.
The exporter if they're VAT-registered (and would be crazy not to be if a serious exporter) gets to reclaim the supply-chain VAT meaning it was exported with no VAT on the product.
Actually you're probably right re exporters. In my financial services business, because we didn't charge VAT on our product (fund management services), we couldn't reclaim VAT on our expenditure. I was thinking (probably mistakenly) that if you couldn't charge VAT on your sales (because they were exports), then you couldn't claim them on your expenditure. And, I'm probably wrong.
But I'm still struggling to understand how VAT is a tax on imports, as it is levied on all consumer expenditure irrespective of type*. Now, that being said, it will tend to reduce a trade deficit, all things being equal, because its existence will tend to discourage consumption. And a trade deficit is simply the excess of consumption over production.
* You could argue that as it's not levied on essentials, and essentials are often locally sourced... but no actually, that doesn't work.
Walkers Shortbread is a family company which has been established in the Highlands of Scotland for 120 years.
We take great pride in our Scottish heritage, and we work closely within our community as a key employer for our area, Speyside. We have a dedicated and loyal local workforce of long term employees, and the family values of the company come from generations of family ownership.
One of our key business principles is maintaining our manufacturing in Scotland for the long run and this is what we as a business and family strive for.
The Walker family would like to clarify that the Union Jack Keepsake tin is one of many tins currently available, each of which is designed to celebrate an array of places and events and includes the launch of the Love Scotland Keepsake range at the start of the year.
We strive continuously to offer a wide range of products to suit our global customer base.
Actually you're probably right re exporters. In my financial services business, because we didn't charge VAT on our product (fund management services), we couldn't reclaim VAT on our expenditure. I was thinking (probably mistakenly) that if you couldn't charge VAT on your sales (because they were exports), then you couldn't claim them on your expenditure. And, I'm probably wrong.
But I'm still struggling to understand how VAT is a tax on imports, as it is levied on all consumer expenditure irrespective of type*. Now, that being said, it will tend to reduce a trade deficit, all things being equal, because its existence will tend to discourage consumption. And a trade deficit is simply the excess of consumption over production.
* You could argue that as it's not levied on essentials, and essentials are often locally sourced... but no actually, that doesn't work.
If you have a tax that considerably hits imports but not exports then ceteris paribus you are going to reduce your imports but not your exports. You are on a balance of trade basis taxing imports.
Of course you're also taxing domestic production for the purposes of domestic consumption but Trump is interested in international trade and not domestic production. In the context of international trade VAT is a tax hitting imports only.
Actually you're probably right re exporters. In my financial services business, because we didn't charge VAT on our product (fund management services), we couldn't reclaim VAT on our expenditure. I was thinking (probably mistakenly) that if you couldn't charge VAT on your sales (because they were exports), then you couldn't claim them on your expenditure. And, I'm probably wrong.
But I'm still struggling to understand how VAT is a tax on imports, as it is levied on all consumer expenditure irrespective of type*. Now, that being said, it will tend to reduce a trade deficit, all things being equal, because its existence will tend to discourage consumption. And a trade deficit is simply the excess of consumption over production.
* You could argue that as it's not levied on essentials, and essentials are often locally sourced... but no actually, that doesn't work.
If you have a tax that considerably hits imports but not exports then ceteris paribus you are going to reduce your imports but not your exports. You are on a balance of trade basis taxing imports.
Of course you're also taxing domestic production for the purposes of domestic consumption but Trump is interested in international trade and not domestic production. In the context of international trade VAT is a tax hitting imports only.
I'm sorry, I don't understand.
A sales tax, or a value added tax, taxes individuals. It either taxes their income, or their consumption.
VAT is a tax that hits domestic production and imports.
Actually you're probably right re exporters. In my financial services business, because we didn't charge VAT on our product (fund management services), we couldn't reclaim VAT on our expenditure. I was thinking (probably mistakenly) that if you couldn't charge VAT on your sales (because they were exports), then you couldn't claim them on your expenditure. And, I'm probably wrong.
But I'm still struggling to understand how VAT is a tax on imports, as it is levied on all consumer expenditure irrespective of type*. Now, that being said, it will tend to reduce a trade deficit, all things being equal, because its existence will tend to discourage consumption. And a trade deficit is simply the excess of consumption over production.
* You could argue that as it's not levied on essentials, and essentials are often locally sourced... but no actually, that doesn't work.
If you have a tax that considerably hits imports but not exports then ceteris paribus you are going to reduce your imports but not your exports. You are on a balance of trade basis taxing imports.
Of course you're also taxing domestic production for the purposes of domestic consumption but Trump is interested in international trade and not domestic production. In the context of international trade VAT is a tax hitting imports only.
I'm sorry, I don't understand.
A sales tax, or a value added tax, taxes individuals. It either taxes their income, or their consumption.
VAT is a tax that hits domestic production and imports.
Emphasis added.
You've just said it yourself, VAT taxes imports. All imports get taxed.
Domestic production doesn't get taxed if it is getting exported.
So if the UK has a 20% VAT rate then an American export to the UK is subject to a 20% tax. If the UK exports to America then that tax isn't there and there is potentially only a sales tax of about 6% to worry about.
American exports to Europe are subject to a considerably higher tax rate than European exports to America are. Is it any wonder then that America consumes so much and exports so little when their tax system encourages that?
I would not say VAT taxes individuals, it taxes goods and services. I as an individual can spend my money on Financial Services, Children's Clothing, Food etc and be subject to no VAT or spend it on meals out, adults clothing and other services and all that has VAT. It's what gets charged that matters not the individual. Anything that is taxed causes an effect to make what's being taxed less valuable and what's not being taxed more valuable - the higher the VAT rate and especially the higher the differential in the VAT rate the more attractive exporting is.
A sales tax, or a value added tax, taxes individuals. It either taxes their income, or their consumption.
VAT is a tax that hits domestic production and imports.
Emphasis added.
You've just said it yourself, VAT taxes imports. All imports get taxed.
Domestic production doesn't get taxed if it is getting exported.
So if the UK has a 20% VAT rate then an American export to the UK is subject to a 20% tax. If the UK exports to America then that tax isn't there and there is potentially only a sales tax of about 6% to worry about.
American exports to Europe are subject to a considerably higher tax rate than European exports to America are. Is it any wonder then that America consumes so much and exports so little when their tax system encourages that?
I would not say VAT taxes individuals, it taxes goods and services. I as an individual can spend my money on Financial Services, Children's Clothing, Food etc and be subject to no VAT or spend it on meals out, adults clothing and other services and all that has VAT. It's what gets charged that matters not the individual. Anything that is taxed causes an effect to make what's being taxed less valuable and what's not being taxed more valuable - the higher the VAT rate and especially the higher the differential in the VAT rate the more attractive exporting is.
Surely decisions on whether to sell to domestic markets or export to foreign markets are based on the relative attractiveness of each (and by extension how competitive you are in each)? A tax like VAT which is applied equally to all products regardless of point of origin is an irrelevance in this context, isn’t it? It doesn’t cause American goods to be less competitive in the European market, and it doesn’t cause European goods to be less competitive in the American market. It also doesn’t cause European goods to be cheaper to produce than American goods.
Isn’t Trump’s complaint is that somehow American goods are being discriminated against in Europe in a way that European goods aren’t in America. Which if they are isn’t a result of VAT (or lack thereof in America).
Comments
http://www.bbc.co.uk/sport/live/cricket/43012102
http://www.heraldscotland.com/news/16066512.complaints-over-walkers-shortbread-sold-under-a-union-flag/?ref=mrb&lp=1
Indeed, I'd go further, and say that because VAT is charged on the products in the supply chain of an exported product, it contains an element - probably a substantial element - of VAT in the price, while a sales tax explicitly falls only on consumers.
As for the supply chain that's not true is it? While VAT is levied through the chain, VAT registered companies are permitted to reclaim all VAT they've spent and that can be over 100% of what they've taken meaning that HMRC pays the company a net VAT refund.
The exporter if they're VAT-registered (and would be crazy not to be if a serious exporter) gets to reclaim the supply-chain VAT meaning it was exported with no VAT on the product.
But I'm still struggling to understand how VAT is a tax on imports, as it is levied on all consumer expenditure irrespective of type*. Now, that being said, it will tend to reduce a trade deficit, all things being equal, because its existence will tend to discourage consumption. And a trade deficit is simply the excess of consumption over production.
* You could argue that as it's not levied on essentials, and essentials are often locally sourced... but no actually, that doesn't work.
We take great pride in our Scottish heritage, and we work closely within our community as a key employer for our area, Speyside. We have a dedicated and loyal local workforce of long term employees, and the family values of the company come from generations of family ownership.
One of our key business principles is maintaining our manufacturing in Scotland for the long run and this is what we as a business and family strive for.
The Walker family would like to clarify that the Union Jack Keepsake tin is one of many tins currently available, each of which is designed to celebrate an array of places and events and includes the launch of the Love Scotland Keepsake range at the start of the year.
We strive continuously to offer a wide range of products to suit our global customer base.
https://www.walkersshortbread.com/blog/post/official-statement-walkers-shortbread/
Also: https://www.walkersshortbread.com/uk/shortbread/saltire-keepsake-tin/
Whisper it quietly, but perhaps one of the tins outsells the other one?
Of course you're also taxing domestic production for the purposes of domestic consumption but Trump is interested in international trade and not domestic production. In the context of international trade VAT is a tax hitting imports only.
A sales tax, or a value added tax, taxes individuals. It either taxes their income, or their consumption.
VAT is a tax that hits domestic production and imports.
You've just said it yourself, VAT taxes imports. All imports get taxed.
Domestic production doesn't get taxed if it is getting exported.
So if the UK has a 20% VAT rate then an American export to the UK is subject to a 20% tax. If the UK exports to America then that tax isn't there and there is potentially only a sales tax of about 6% to worry about.
American exports to Europe are subject to a considerably higher tax rate than European exports to America are. Is it any wonder then that America consumes so much and exports so little when their tax system encourages that?
I would not say VAT taxes individuals, it taxes goods and services. I as an individual can spend my money on Financial Services, Children's Clothing, Food etc and be subject to no VAT or spend it on meals out, adults clothing and other services and all that has VAT. It's what gets charged that matters not the individual. Anything that is taxed causes an effect to make what's being taxed less valuable and what's not being taxed more valuable - the higher the VAT rate and especially the higher the differential in the VAT rate the more attractive exporting is.
Isn’t Trump’s complaint is that somehow American goods are being discriminated against in Europe in a way that European goods aren’t in America. Which if they are isn’t a result of VAT (or lack thereof in America).