I pay tax on my Steam purchases and I live in the USA.
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From my understanding, the main difference between these taxes and American sales tax is that they're targeted specifically at digital content. They're designed less as a revenue-raising tax, and more as a way to protect the interests of rightsholders such as television and telecom companies who are seeing drop-offs in subscriber numbers because of Netflix et al. This has made these sorts of taxes highly controversial, since there's at least a perception that they're designed to protect corporate interests rather than consumers'.
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Ayup. Thanks for making it more obvious that I would have. :P
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We pay tax on all local purchases, but imports weren't taxed. Companies that make their money with 50% markups (no joke) weren't too happy with this because since the internet got helpful to seeing how much we were ripped off, people were importing rather than buying locally, so they pushed for this stuff to be taxed. As it is, they still aren't happy, because right now physical imports can still be untaxed.
Too bad that rather than trying to offer decent prices, they decide we should just pay more for the other stuff.
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If it makes you feel any better, Illinois is the only one of 50 states (I believe) that pays sales tax on Steam.
Everyone wants their piece of our paychecks.
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I'm just peeved about it because it is bullshit. All my games will go up in price. Steam, PSN, Nintendo eShop, etc. I'm already paying more down here on two of those.
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I live in Washington and I pay sales tax on Steam. Not sure about other states though.
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Yeah I forgot about Washington. That's because Valve is based there, so you're technically buying within the state and state sales tax would apply anyway.
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Wait really? Fuck. I just assumed all states did :(
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with digital purchases, companies are only obligated to collect sales tax if they have a nexus in the state. Headquarters, Warehouse, Base of operations, something.
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Markup aside, there isn't really anything wrong about requesting that some costs aren't exclusive to local competitors. Paying taxes is always annoying, especially if you didn't have to pay some so far. But imho that step is logical and fair. And it actually is in everyone's interest, if you don't want jobs and investments to move to tax dumping regions.
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People don't go with other options over a few dollars. We do it over a lot of dollars more and a loss less being offered. For example, the Spark Lightbox service that wanted this done because of Netflix. You are stuck with a single ISP (and I know no one who uses them since everyone else seems to offer better deals), you can't use it on as many devices, it doesn't support as many users using the account at one time, has no movies and less TV shows. It still costs as much as a second tier Netflix account (or did before the parent company and a few others got this passed).
And saving jobs? Ha. People are leaving NZ to move to Australia of all places because we don't really get paid that much down here. This money isn't going to us.
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Wait. So people are leaving NZ, where the most dangerous critter is maybe a runaway ram, to Australia, where even the plants exist only for the sole purpose of killing humans?
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People leaving NZ to move to Australia isn't really valid in the general context if it makes sense that companies, operating from a foreign country, should pay the same taxes as those companies that operate from the country they are doing business in.
I fully understand that competition in a smaller isolated nation is not contributing as much as you'd wish for a society. But your grudge about those circumstances simply isn't related to the core issue in this topic.
And if Spark Lightbox is as terrible as you say, 15% for Netflix won't safe their asses. ;)
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First of all, taxation is not in anyone's interest and by nature the taxation of goods results in stifling competition and is ultimately bad for the consumer. Just because we widely accept sales tax as a fact of life does not make it in anyone's interest.
Sales tax is the governments way of taxing a good or service twice, or a third time depending on your perspective. Corporations pay corporate income tax. Consumers pay income tax. So where is the need for a sales tax? Why is a sales tax remotely necessary? If you purchased the good or service from a building that is owned by and maintained by the government then a sales tax makes sense - if not then why would it? Why should your government get a percentage of every monetary transaction? The money you spent to purchase the good or service was ALREADY taxed. The money the company received is GOING to be taxed as corporate income tax. So why do you think a sales tax is in everyone's interest?
If everyone = the government, then yes it is in everyone's interest lol.
Now a tariff is completely different than a sales tax, and tariff's exist to protect the local workers by taxing goods and services that could easily have originated in that country but did not. In that sense, a tariff could be, not always are, but could be in everyone's interest.
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I don't know about your country, but here different taxes belong to different instances of the community. Some are national, some on state level, others local. And there you have you one (of many) answer why those different taxes exist. Actually the existence of several taxes instead of just one or very few, benefits competition. Between nations, states, communities and companies.
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I live in the USA where we have local, state, and federal taxation.
Sales tax is a state tax and the federal government receives no benefit from a sales tax.
Let us compare two states in the USA - Texas and Michigan (I have selected these two based on tax rate).
Texas has no state personal income tax. They instead opt to set a 6.25% state sales tax (and city/local can add up to 2% to that) to fund their state government. There of course are other taxes that fund the STATE government, like title and transfer taxes, land taxes, etc, etc.
Michigan has a state personal income tax. They also set a 6% state sales tax to help fund their state government. There of course are other taxes that fund the STATE government, like the above mentioned TTL, land taxes, etc, etc.
When you suggest that those additional taxes in Michigan provide a benefit to competition then how do you arrive at that conclusion? Do you even know who pays the sales tax? The consumer does. You walk into a 7-11 and purchase a 20oz bottle of Mountain Dew for $0.99. Guess how much they charge you? $1.05. You as the consumer pay the 7-11 the sales tax, and 7-11 then provides the sales tax (in this case 6 cents) to the state government. Do you know who doesn't pay the sales tax? 7-11 and Mountain Dew because their transaction is regulated as a wholesale and not retail transaction so no sales tax is paid.
I'm not going to insult your intelligence (although maybe I already have?) but the fact is that sales tax does nothing to benefit the consumer unless you're in Texas in which case it benefits you by not having to pay a state personal income tax. The result is quite simple - a consumer who makes $60,000 a year in Texas has more money in their pocket at the end of the day than if that consumer lived in Michigan due to taxation. Now the macro economics result is that wages are proportional to living conditions and a company based in Texas has the ability to pay an employee a lower salary than if the company was based in Michigan - based on the overall economic condition. If it costs more money to live in Michigan than it does to live in Texas then wages will reflect that. Therefor the only logical conclusion that can be reached is that Michigan has taxed itself out of any competition - and the results of that are quite clear.
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I just marvel how you got the idea that I'd consider your example of Michigan and Texas to be ideal and the best possible achievement about taxes. Maybe, (but just maybe!) other countries might have a smarter approach how taxes are arranged on national and state levels?
Just as you said, you really seem to consider myself a moron. At least I'm intelligent enough to quit after that "realization", phew.
We have our national day in Germany today, and I'll better spend some minutes more with my family, instead to prove you that I didn't study political economics for naught. Farewell and next time just avoid entering a debate with me, if you are so troubled with my seemingly too obvious shortcomings.
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Any implications that you received from what was actually written are solely done at your own discretion and were not inherently implied.
I never stated that the example was 'ideal and the best possible achievement about taxes'.
I never said you were a 'moron'.
If you don't wish to have a conversation about how 'beneficial' taxation is, the unwillingness probably stems from the the inability to provide any examples to how beneficial taxation is, not because I am using some type of trickery or insults (which again are not even present in my post). If you wish to have an intellectual conversation with someone then you should consider taking what was said/written as what is said/written and not projecting your internal fears of being a 'moron' as me actually having said that.
There are many countries in the world that have better taxation than the USA, many of those countries employ a VAT - which has its own unique pros and cons. That tax system being 'better' does not make it 'beneficial' from a macro economics standpoint.
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taxation is not in anyone's interest
Some government services are absolutely in the interest of most people. Services like a police force, or streets. Those services need to be funded somehow, and it is usually done through taxes. therefore, taxation is in (almost) everyone interests.
Now there's two debates that people can, and do, disagree on:
1) which services the government should provide, and to what extent.
2) how to raise funds to pay for those services
Whether funds are raised through corporate income tax, personal income tax, sales tax, or, more commonly, some combination thereof, is a matter of how the costs are allocated among the various constituents. How a tax is designed and what it's levied on determines whether it is more likely to burden the poor, the rich, or a targeted group (such as a nicotine tax).
You bring up the fact that Texas has no income tax. They raise funds through sales tax instead. On the other end of the spectrum are states like Delaware, which has no sales tax, and raises their funds through income tax. It's not a matter of one system being better than the other, or even more fair, just a philosophical debate about the best way to raise revenue, with most states choosing a bit of both (i.e. sales tax and income tax)
In the end, the revenue needs to be raised somehow, and sales tax versus income tax (and flat tax vs progressive tax) is just a matter of shifting the burden.
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you quote me out of context dingbat. The full quote "taxation is not in anyone's interest and by nature the taxation of goods" is exactly what I said. Of course SOME taxation is necessary to run government - that is not what is being discussed - the necessity of over-taxation and taxation on goods and services through a sales tax is what I am specifically discussing.
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one benefit of a taxation on goods is that it discourages overconsumption.
one disadvantage is that it is generally a regressive tax, which proportionally burdens the poor more than the rich.
overtaxation is not good, but the question up for debate is what constitutes overtaxation vs regular taxation
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why is the over consumption of goods something that needs to be discouraged?
Most people would agree that sales tax does place a higher financial burden on the poor - not a disproportional dollar amount - but a disproportional percentage of income. So in agreement with that point of your response I will not provide additional comment.
I would be inclined to suggest that (in my previous example) a state like Texas that has a 6.25% sales tax compared to a state like Michigan that has a 6% sales tax AND a personal state income tax - that the additional taxation is in excess and constitutes overtaxation.
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Excluding federal aid, Texas raises $72 billion for 27 million people, whereas Michigan raises $27 billion for 10 million people. With rounding, both states raise roughly $2700 per person for their total budget. So in that respect they're perfectly matched.
Texas raises about $27 billion (40%) from its sales taxsource, whereas Michigan raises $16 billion (60%) from sales tax and income tax combined source
Except that these numbers are misleading. Vehicle sales tax and gasoline tax add up to another $8 billion for Texas, bringing the grand total to $35 billion, or 48%.
Texas raises another $4 billion from oil & gas tax, and another $1.5 billion from land income, which account for another 7.5% of their budget, resources that Michigan doesn't have access to.
Separately, even though Texas doesn't have business income tax, it raises $4.6 billion in franchise tax (which is levied on companies doing business in Texas), and another $2 billion in insurance taxes (combined, 9% of the budet), which is significantly more than the $0.7 billion net business taxes received by Michigan (2.7% of budget).
again, the per capita raised in each state is quite similar, they just raise it in different ways.
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Great post, great sources.
There is a lot of parts of your comment that really are a different topic all together - the very nature of a global marketplace and job/population distribution (IE Detroit shrunk from 1.8 million people to just below 700K people today) obviously that has its own unique set of economic impact. Yes, the overall population of the state grew, but it would be intellectually dishonest to discount the overall economic impact of the disruption to the manufacturing industry that originally put Detroit on the map.
So let's for the sake of a comprehensive debate, get back on the track.
Are the really similar?
While the total income per capita is roughly the same, the sources of that income are quite different. The sources provided show that clearly business pays a substantial portion of the taxation there where only 2.7% of the total Michigan income is from business. That says simple - individuals pay the $2700 per person of the Michigan budget, whereas the individuals in Texas only pay about $1900 per person. That is (for a low income family) a substantial difference. So does Michigan overtax the individual? It would appear that way - that means (if living costs for goods and services are near equal) the average employer in Michigan has to pay the average worker $800 more per year in salary to cover that cost. That might not seem like a lot to a mega corporation - until that corporation employs thousands of people like an average manufacturer would. We can see in real life that not only have jobs left Detroit for other countries, but have also left Detroit for other cities in other states - that would be the nature of a free market imply over taxation.
But back to a question that was not answered - why is the over consumption of goods something that needs to be discouraged?
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let's start with your question re discouragement of overconsumption. It's open to debate whether consumption should be encouraged/discouraged. Sales tax is a way to discourage consumption.
Now to get to your comment of overtaxation. That's a matter of perspective. In the end, taxes get paid one way or another, and any tax levied on business is passed on to the consumer in the form of higher prices, or onto the owners in the form of reduced dividends. In the end, it still comes down to people. How much gets levied on the rich vs the poor, on producers vs consumers, on owners vs workers is a matter of allocation, and what's fair depends a lot on who's asked the question.
How the tax is distributed is a question of what's more fair to which constituency, and no matter what the allocation, some will feel that their individual burden is disproportionate and unfair.
Now whether the population as a whole is overtaxed is a question of what services are being offered, whether those services are necessary, whether those services are cost effective, etc. Again, it's a philosphical debate, and there will always be people who believe certain services that are provided shouldn't be, and that certain services that aren't provided should be. Same in terms of value for money.
So, the concept of "overtaxed" is a subjective matter, based both on whether certain services should be provided (and at the current cost), and on whether the tax burden is distributed equally.
The Texas budget shows how stealth taxes can be used to raise revenue while ostensibly having low nominal taxes. Similarly, a comparison between effective tax rates and nominal tax rates shows other ways of meddling (e.g. using tax incentives instead of subsidies. the end result is the same).
Personally, I don't think this this country (as a whole) isn't overtaxed so much as it's underserviced. A lot of money is used ineffectively, and that we're receiving substandard service relative to what we should get. I also think the singular focus on taxes is problematic, because there are many ways to do an end-run around it.
you bring up the point that companies in michigan needs to pay employees more to achieve the same standard of living. But at the same time, those companies pay less in corporate taxes, so they have more they can spend on salaries. I don't want to oversimplify that they cancel each other out, but there are two sides to the story this actually relates to something I've experienced a few times IRL. Right now, I'm considering relocating to a city that straddles two states, and I can live on either side of the state border. On one side, income tax is higher, but on the other side property tax is higher, as well as car registration fees and some other taxes & fees. So it becomes a math problem as to whether it makes more sense to live on one side versus the other. Quite simply, there's a certain level of income that serves as the threshold; under X live in state A; over X live in state B. I had the same thing where I currently live, which is on the border of two states as well. Where I live, taxes are much higher, but the service received is significantly better. Put simply, if I lived on the other side of the state line, I'd save tens of thousands in taxes, but I'd have to put my kids in private school, which costs tens of thousands; here the schools are very good
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I have lived in both Michigan and Texas and found that Texas is much more advantageous for my personal income and lifestyle.
Maybe instead of 'over taxation' I should have used the term 'competitive taxation'. States that constantly see a downward spiral of job growth when compared to neighboring states must be clearly offering a non-competitive environment - whether due to taxation or public service or population / education demographics.
But realistically the question you posed has a lot of correlation with the problem - what services should be provided for through tax revenue. As someone who believes in smaller government and the right to free market with limited government intervention then I obviously believe that taxation and services offered are unnecessarily high. And that is not even bringing into the equation that no service the government has ever provided is cost effective.
Over taxation and being under serviced really is the same problem with a different name. But reasonably we understand that Government will never provide better service - so over taxation is the unfortunate reality.
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IMO government rarely provides better service, but they are the best source for essential service.
However, we probably disagree on what those essential services are. I consider regulation an essential service. I also consider welfare an essential service, in that there will always be people who are unable to work who need assistance. yes, let's not talk about people who are unwilling to work, who we can both agree should just get off their lazy asses and get a job
When it comes to business matters, I generally believe that government should not intervene, but that there are times/occasions where it makes sense, such as when the project is beyond the scope of private industry (much less of a problem these days; airports are a good example), when it makes sense to encourage certain early-stage industries that otherwise might not yet be feasible (quite rare) and on occasion where it just makes sense to force businesses to work together on something (the most obvious example is in sharing power lines)
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California state does not need to pay taxes for Steam, but everything else is expensive here.
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I could be mistaking but i think there are only a handful of states that do tax on internet goods. Missouri doesn't get charged taxes on steam or other various sites either.
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Ouch, one less country that's actually benefited from regional pricings.
A tax on intangible things sounds kinda weird to me (I mean, a tax other than the IVA or however is called in the rest of the world).
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sad :(
a lot games cheaper in NZ (row)
but we still have norway similiar price with NZ :D
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i feel like they are doing everything to push us going back to the black market, well i mean the ''free market'', piracy was pretty high before then they added services to help developer to make better sale then it dropped, but now, it will raise again
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Well, if you can't beat them. Tax them right?
Government solution to everything... Sad.
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Certainly seems so. I mean, when I can pay $16 a month for Netflix or $100+ (with less) for Sky TV with some extra channels, I know what I'm picking.
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" all foreign digital purchases "
sounds like Valve's setting up local branch there :P
still far better than 24% tax here in Finland.
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I don't know exactly what you are referring to but I assure you that there is no way that steam is paying the tax out of their profit from the sale. Taxes are ALWAYS passed on to consumers.
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EU has taxed digital purchases from US and EU since 2003 (predating Steam). It's not new thing. Change made this year made taxes paid by EU and US equal, before EU companies had to pay less, since they could use tax loopholes. Which is why Valve had EU branch that handled sales made to EU (Now this branch handles only hardware sales, while games are sold by Valve US)
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Yes, Publishers set prices on euros with taxes included. And yes prices do account for that.
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wait what? :( is this for everything online? damn wanted to buy a harness
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Currently digital only. The local companies that pushed for this want physical included.
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yeah probably wont be getting games any more with an extra 15% already costly enough. Hopefully can get a harness b4 physical good are done
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hmm company has to pay GST for over NZD60,000+? so smaller bundle sites & such mightn't have to pay GST then hmm
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I expect the Valve already includes GST in their prices, I can't imagine they would have forgotten about it when they reshuffled the prices when they introduced NZD support.
It will be interesting to see what happens to third party vendors, for example Sega titles had their NZD prices adjusted a while ago and the Humble Store is definitely following along with them.
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pf. im from europe and i pay 9.99 euro for a game that is 9.99 usd in us steam. very fair play.....
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There are already games where we pay more.
This applies to us.
https://en.wikipedia.org/wiki/Australia_Tax
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hmm.. so in conclusion - Valve is greedy because governments are greedy!
Hurray for piracy :D lol
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Why should a foreign company not pay sales tax when your local ones have to?
Edit: Seeing the earlier comment about 50% markups. How are the jobs meant to be paid for? If you want workplaces locally you have buy stuff locally.
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The job situation sucks down here. Ignoring the issue of unemployment, people who actually want decent cash have been moving to Aus. Just because these companies want us to pay more doesn't mean they want to pay the workers more.
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I think a better question than the one you proposed is simply - why should any company pay sales tax?
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Would Valve follow suit? They have no history adjusting based on local law, don't they?
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There are two choices, they pay 15% or they make us pay 15%.
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Best we can hope for is that they won't simply dump it on the consumer, that they try and absorb a bit to prevent losing some sales.
But I doubt it.
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Or they open a local subsidiary so the purchases will no longer be "foreign"(unless that's something NZ already has rules against).
Buit that's a moot point since this is Valve we're talking about, and they'll choose the option that for them has the lowest cost in money and the lowest cost in effort -> meaning they'll just charge the tax to the customer.
Best bet at this time isn't one with good odds - publishers could use the regional pricing stuff and lower their prices in NZ, so the final price for consumers stay the same.
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Local would still make them pay 15%, so really, just a matter of them adding the taxes to our purchases
And ha, like other companies would lower their prices
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Kiwi Valve as a company name would sound awesome though. :)
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Uh, that's sad. But you know what they say about death & taxes...
Hungary wanted to tax the usage of internet a few years back, now that's something. Let's hope your lawmakers don't go that crazy.
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Well, you can have a common topic with many South Americans then it seems.
Although it sounds strange from here: "Here we are, a small island literally in the middle of the fucking nowhere so far away from anything else that we may genuinely survive a global zombie apocalypse, importing pretty much anything that is not made of sheep or Peter Jackson, so let's put an import tax on stuff! That would boost economy by a fuckton…"
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Well, we will still be ROW, but there will be very few games where we aren't going to be more expensive with the extra cost.
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Same way in Puerto Rico where my brother lives. When you import pretty much everything, prices are always going to be higher. Also, they aren't putting the import tax as a punishment, it's a requirement to offset other trade tax agreements where the goods originate. Otherwise, why would anyone have the incentive to deliver goods to an island (allowing an economy to exist at all) in the first place?
Arguably, this is a standard cash-grab though, as we are talking about intangible goods. I can understand it though, as a government I would probably want all goods (tangible or not) to be regulated the same way just to make things simpler.
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I tried to ask some Muricans on why the ever-living hell didn't they just made Puerto Rico an official state, since it is effectively a client state already.
They tried to explain it, but I couldn't understand. From here, I cannot see the point of having a controlled foreign policy but try to have a separate economical setup with agreements and such with a country they are essentially a part of.
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It's total bullshit and it's destroying the economy of the island. Basically, the US wants to have their cake and eat it too. We're happy to take PR's income taxes but we don't want the responsibility of actually governing the place. San Juan's current debt is 10 times worse than Detroit's, yet the Supreme Court has continually denied bankruptcy rights. After the corporate tax breaks from the 90s ran out, all American companies left the island and created a vacuum that has only been growing since. For some reason, people have stopped vacationing there as well. Even though you don't even need a passport, Americans seem to prefer the Bahamas or Jamaica (both more expensive alternatives). Unemployment for the entire island is at 50% and rising. This obviously pushes crime rates higher while neighborhoods are degrading through pollution and overpopulation, stray animals are a huuuge problem. There are more cars than drive-able roads and virtually no job growth. All of this in one of the MOST BEAUTIFUL PLACES IN THE WORLD.
My family goes back generations down there, it's an extremely frustrating situation.
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Still sounds like as if the US policy towards it somehow stuck in early 60s mentality ("we exploit it a bit and may totally fuck it up in the process, but eh, time to move on"… the reason half the world still hates that country after half a century).
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And deservedly so. There's a whole hell of a lot more to life than business.
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well it sucks, given that as a tax it makes no sense (outside of just being a greedy money grab), but on the positive side the prices will still be lower than they are at physical stores, and on the occasion where THAT isn't the case, we can at least still rely on trading to get things from some of the cheaper trade friendly regions that still exist.
either way, here in nz physical stores have been ripping us off for decades, and on principle even if i have to pay the tax from digital stores, ill still do that on principle... if nz stores want our cash, theyre gonna have to start playing ball with their pricing and stop gouging the fuck out of us.
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My primary issue with it is simply because I'm unemployed. Trading paid for my Steam games for a year, and some console stuff when I got paid with PayPal. This kills that. :(
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Sell access to accounts.
Guy here does that and makes at least $20k a year, while average year pay is around $10k.
It funniest when people buy access from him, then sell that access forward.
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Sell all the cards, items, keys buy gifts at lower price that can be traded in the future before its implemented.
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i feel the pain,although I live in Hungary myself (and we are already being fucked over with sky high VAT and currency difference)
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Because of a bunch of local ****s that don't want to offer affordable services themselves, all foreign digital purchases will now be taxed 15% in New Zealand. This includes stuff like Netflix, ebooks and digital game purchases. Since even the fairly priced games are only 10 - 12% cheaper here, the moment Valve puts it up will leave New Zealand paying more than the majority of other regions.
If anyone wants to grab a game that is currently cheaper here, you might want to get on that soon. The law has already passed, it is just a matter of time. Netflix have already said they will give us the old prices for this month, but Valve I have no clue on.
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