Steve Jobs Blames Government, Tax For Higher iPad Pricing For International Users
Apple announced the launch date and pricing for the iPad for international users earlier in the week.
MacRumors is reporting that Steve Jobs has responded to customers who had sent him an email to complain about the higher prices in the international markets compared to the US.
Steve Jobs responded to an email from a customer in UK planning to buy an iPad:
Please educate yourself. UK prices must by law include VAT, which is around 18%. US prices do not include tax.
Value added tax (VAT) is similar to the sales tax that is familiar to most residents of the United States, but is applied uniformly throughout the country for a given type of item and is included in the advertised pricing. Sales tax in the United States is not included in advertised pricing, as it varies significantly by region, even down to the municipality level.
The standard VAT rate in the UK is 17.5%, meaning that the £429 base price for the 16 GB Wi-Fi iPad in the UK is actually only £365 in "pre-tax" pricing. At current exchange rates, this corresponds to approximately $540 in the United States, or an approximately $40 premium for U.K. customers. While the price difference is not insignificant, it is considerably smaller than it might appear at first glance.
Meanwhile, customers in Germany were surprised to find out that the prices in Germany for the iPad was higher than other European countries such as Italy and France, even if one took into account the tax differences.
Steve Jobs responded to an email from a customer in Germany who complained about the price difference:
Blame your government. Germany just added a new copyright levy for computers.
Folks at fscklog points out that the iPad prices are higher in Germany due to the extra copyright tax applied on the iPad as it is classified as a "PC without burner".
MacRumors points out:
Apple has long offered somewhat higher international pricing on his products than it does in the United States, even accounting for difference in taxation practices. These differences are possibly due to increased overhead for distribution and "cost of business" in other countries, as well as the need to account for foreign exchange rates that can fluctuate over time.
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