Today’s Opinion: Screwed twice

POSTED: 03/3/11 12:23 PM

George Greaux’ letter to the editor about the turnover tax suggests that the article we published on yesterday’s front page was grossly misleading.
We respectfully disagree.
The letter writer is of course right when he says that taxes are part of the cost for a company and that they have to be taken into account to calculate prices that will enable the long term viability of a company. That’s economics 101, so we have no argument there.
The point is however that the tax inspectorate has made a clear statement about the turnover tax. That statement is, that the tax should not be passed on to the consumer.
So companies that are now suddenly adding 5 percent to their prices, while they did not do this before, are crossing a line here, especially if they did before the introduction of the higher tariff what the letter writer suggests – namely, including the turnover tax in the price.
If this is the case, companies that suddenly add 5 percent to their prices, conveniently forget that they have already added the old 3 percent turnover tax to their old prices.
In other words, consumers are not paying 5 percent, but an astonishing 8.14 percent.
If something retailed for $100, and it included 3 percent turnover tax, the price without the turnover tax would be something like $97.10 – give or take a couple of digits behind the dot.
So the price with the 5 percent turnover tax ought to be $101.95.
But the smart bookkeepers at companies that complain about the unfairness of it all, see an easy way to increase their bottom line by adding the 5 percent to the full $100. That’s how they arrive at a price of $105 for something that ought to be significantly ($7.90) cheaper.
How nice it must be to complain about the turnover tax and use it at the same time to – excuse our language – screw consumers twice.
How the tax inspectorate, or anyone with a mind to protect consumers’ interests is planning to keep a grip on these prices is beyond us.
In the meantime, we encourage disgruntled consumers who receive a receipt with the 5 percent turnover tax added to it to send it to this newspaper, We’ll collect them and submit all your complaints with one cover letter to the tax inspectorate.

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