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A bit unfair in many ways that in the USA that dealers can list prices on their web site that show no local taxes - this is not payable on a mail order transaction to the UK, but if you are there in person it is payable - Whereas we have to show the actual price you pay, including all fees - Also remember now, that officially USA dealers are not allowed to send new goods out of the USA to other countries as part of their dealership agreements - And if they did it does not mean the UK will accept any responsibility for warranty repairs, if required - Furthermore if you paid for it on a UK credit card, then chances are you would not get such a good exchange rate and also a handling fee is generally payable around 1-2% for conversion of funds - banks want their 10 penneth
In short, over 20% of the cost of a new guitar in the UK goes to Mrs May and our beloved leaders - So on a £2000 they will get around £400 for doing nothing, which may well be more than the dealer makes
Also the treasury spends the revenue on public services, or at least should do (a whole other argument).
Or am I reading this wrong?
The level of tax (import duty), which is now hidden in the price, can be discussed on a new potential trade agreement between the UK and the USA (it appears as though we can only discuss such a potential deal once we have left the EU) - You and I may well see vat and import duty as an additional fee that goes towards our government, which indeed it is - To a degree they are different, but they amount to the same thing, in that additional fees go to the government
So in short, import tax, around 4/5% is payable on the import cost of the guitar, to now establish a cost price to the dealer - the dealer now adds his margin to establish a selling price - the dealer is now told to add 20% vat which becomes your final price
Effectively the only difference in the trade price I pay Fender for a USA Guitars, compared to a USA dealer, is the import tax and a small admin fee for carriage - The dealers profit margin in the USA or the UK will be similar - Allow additional cost of shipping/carriage - So many brands that are now shipped direct to the UK (Fender, Gibson, PRS etc who have EU/UK operations with no 3rd party or middleman involved) the main difference in price between the USA and UK is what the government charge via import tax and vat
Hope that makes sense
If nothing else you would expect prices to drop by the 4 or 5% that is import duty.
however the 4/5% import duty won't be removed from the actual selling price - It will only be removed from the actual cost price at the price it is imported into the EU/UK accordingly - so for easy figures at this stage
If a guitar is imported into the EU/UK at £1000 and now 4% import duty is applied - the guitar now costs £1040 - say the dealer adds 35% - the guitar is now £1404 - now add vat and the guitar is finally sold at £1684
same example but no 4% import duty - £1000 + 35% dealer ='s £1350 - add 20% vat and the guitar is finally sold for £1620
so yes a saving of £64 - represents around 3.9% - actually when I did this example I suppose the 4% or 3.9% is fairly negligible as a % - but it is nevertheless a £64 saving - so effectively double that on a guitar around £3200 - and 1/2 that on a guitar around £840 - Granted the saving is better in your pocket as against Mrs May's pocket
If you see VAT as a progressive measure to swell treasury revenues from the sale of non essential items, that's a potentially good thing. If you see it as a regressive tax because the less well off tend to spend more on consumer items as a percentage of their wealth, it's a potentially bad thing.
Confusing stuff.
I'm still not sure whether Fender and co would allow UK dealers to sell at a 20% reduced rrp if EU states had to keep to their VAT prices.
ref your final sentence - I'm still not sure whether Fender and co would allow UK dealers to sell at a 20% reduced rrp if EU states had to keep to their VAT prices - rest assured no government will be removing vat - adjusting it maybe but not removing it - don't blame me for that additional tax/vat, but like it or lump it, get use to it
In fact now I come to think of it, any sweetheart deal on customs duty from the States might lead the EU to consider protectionist measures on all US sourced GB exports (to the EU). But that's going off topic.
(b) Agreed. When the exchange rate was very good (just before the massive crash of 2007/8), while prices were admittedly a lot better than they are now, the reason given why the prices weren't even better and more of a direct conversion to, say, USA pricing, was often, "We have to hedge in case the exchange rate gets less favourable."
Yet when the exchange rate actually gets less favourable, prices rise.
Well if the Tories tend to raise VAT, that should probably answer your question there...
I opted for having just enough ambiguity in my reply. I think.
Cheapest price I can find today is £365!
http://www.soundonsound.com/reviews/laney-irt-x
Since the internet has taken over the guitar game, us idiots drool over their silly tops and lust after buying one.... PRS is ahead of the game on the looks imo
The marketing bloodsuckers know this...
I have a PRS DGT, its nice but now theyre at over 3 grand... come on
http://www.xe.com/currencycharts/?from=GBP&to=eur&view=10Y
In contrast, the pound has had a fairly consistent decline on the dollar since 2006 when it was 2:1. The drop-off in 2008 was far worse but noone was whining then, perhaps because it wasn't self-inflicted that time around.
http://www.xe.com/currencycharts/?from=GBP&to=usd&view=10Y
It's arguably gone a little too far now and will come back to 1.40 or so, but that will probably take a few years. Either way, the fact that GBP prices have remained relatively low until now is actually quite impressive.
In 2006 an SG Standard was about GBP 900, now they're 1100, which is a smaller change than the currency movement should have caused overall. Sure, an LP Standard is double what it was then, but with Amazon's regular blowouts surely noone is buying them at RRP?
Thing is, it was all so predicatable - I take no pleasure whatsover in saying I told you Quitters so.
*An Official Foo-Approved guitarist since Sept 2023.