Post by account_disabled on Mar 14, 2024 3:56:59 GMT
In recent days, the Spanish media have been reporting that surgical masks can be purchased in Portugal at a much lower price than those sold in Spain, which has generated some debate on the subject. In fact, some talked about mask tourism , echoing how profitable it is for Extremadurans to buy this item across the border. VAT on masks The issue resurfaces, coinciding with the presentation of the draft budget, in relation to VAT taxation of this type of goods. It is difficult to understand that an essential item, the correct use of which is essential (and involves changing the mask frequently so that it does not reduce its effectiveness), is taxed at the 21 percent rate and not at a lower.
The justification that VAT is a community tax that leaves no room for discretion clashes with the evidence of different and lower taxation in other countries subject to the same legislation. A simple arithmetic operation allows us to verify that emphasizing tax differences to ensure that prices are equal is not an effective measure. This is so for AOL Email List two fundamental reasons: The price differences are so large that they cannot be explained by differences in taxation alone. A mask that costs the consumer 60 cents, VAT included, is a mask whose price without VAT or with zero VAT is around 50 cents. The point is that, according to the media, in Portugal the mask costs 12 cents. Therefore, the potential savings in VAT does not bring Spain closer to those prices.
And I say potential, because there is another very important factor that has to do with how prices are formed in the markets. The interaction between supply and demand, little understood in general, and even less understood the social good that competition represents in this context. If there is no competition, any tax cuts could increase business margins. Supply - demand tension In April the Government decreed maximum prices for certain health products, as the current shortage was leading to very high market prices. High prices are a symptom of tensions in the markets: a lot of demand that crowds together at a time with a supply that does not respond at the same speed. After a few months, this tension seems to have been resolved with greater supply. In fact, surgical masks do not reach the maximum price set then (0.96 cents). This is, without a doubt, good news. Setting a public price tends to produce.
The justification that VAT is a community tax that leaves no room for discretion clashes with the evidence of different and lower taxation in other countries subject to the same legislation. A simple arithmetic operation allows us to verify that emphasizing tax differences to ensure that prices are equal is not an effective measure. This is so for AOL Email List two fundamental reasons: The price differences are so large that they cannot be explained by differences in taxation alone. A mask that costs the consumer 60 cents, VAT included, is a mask whose price without VAT or with zero VAT is around 50 cents. The point is that, according to the media, in Portugal the mask costs 12 cents. Therefore, the potential savings in VAT does not bring Spain closer to those prices.
And I say potential, because there is another very important factor that has to do with how prices are formed in the markets. The interaction between supply and demand, little understood in general, and even less understood the social good that competition represents in this context. If there is no competition, any tax cuts could increase business margins. Supply - demand tension In April the Government decreed maximum prices for certain health products, as the current shortage was leading to very high market prices. High prices are a symptom of tensions in the markets: a lot of demand that crowds together at a time with a supply that does not respond at the same speed. After a few months, this tension seems to have been resolved with greater supply. In fact, surgical masks do not reach the maximum price set then (0.96 cents). This is, without a doubt, good news. Setting a public price tends to produce.