Skip to navigation

PCPro-Computing in the Real World Printed from www.pcpro.co.uk

Register to receive our regular email newsletter at http://www.pcpro.co.uk/registration.

The newsletter contains links to our latest PC news, product reviews, features and how-to guides, plus special offers and competitions.

Analysis

3 - European taxes force up prices

Posted on 12 Jul 2007 at 11:11

Verdict: <strong>False</strong>

"The regional tax argument doesn't hold water at all - it may make a slight difference, but it doesn't in any way account for large regional differences," says the LSE's Alexander Grous.

Leaving VAT aside, claims that tax issues push up prices on this side of the Atlantic simply don't bear scrutiny. Even if companies are paying corporate tax here, and not solely in the US, the taxman's pie is far more thinly sliced over here. "Although there are other hidden taxes, and it could be closer after adjustments and allowances, the basic corporate rate here is 30% compared to 40% over there, and the UK will drop to 28% next year," says Professor Fender.

So whether it's a software manufacturer doing business here, or it's a reseller that's operating solely in the US, the UK tax rates shouldn't push up prices. The issue is further muddied by the fact that in a near monopoly, as enjoyed by market leaders Microsoft and Adobe, changes in corporate tax have limited effect on prices. "A profit-maximising monopoly wouldn't change its prices based on corporate tax rates, because it would still make more money by leaving its prices high - it will go for the highest price it can charge and simply pay the tax," says Fender.

Back to 'Rip-off Britain: excuses exposed'.

Author: Stewart Mitchell

Be the first to comment this article

You need to Login or Register to comment.

(optional)

advertisement

Latest News Stories Subscribe to our RSS Feeds
Latest Blog Posts Subscribe to our RSS Feeds
Latest Reviews Subscribe to our RSS Feeds
Latest Real World Computing

advertisement

Sponsored Links
 
SEARCH
SIGN UP

Your email:

Your password:

remember me

advertisement


Hitwise Top 10 Website 2008