VAT Tax: Tourist Rip Off?
 

It's always kind of galled me that on nearly every purchase i make in Europe there is a ridiculously high VAT often tacked on and in fact hidden in the purchase price. Have a coffee in a cafe and it's often 20% or higher - one reason, along with higher wages and benefits paid to wait people that coffee costs $3-4 a cup in Europe (and no free refills!)
Anyway i think even in supermarkets i often pay a 20% or so VAT (Value-Added-Tax) that's been folded into the price.
So if i spend $2,000 on a trip just in purchases - food, hotel, transport, etc. I'm probably paying $400 or so into the tax coffers of European countries. I'm paying for their liberal welfare systems, medical care, etc. - all things i'm in favor of and wish we had in the US but i don't feel i should pick up the bill for it in Europe.
Not that a modest sales tax as in the US of around 6% wouldn't be bad as travelers do use some of the infrastructure, etc.
And though on large ticket items over a fairly substantial amount you can get the VAT refunded when you exit Europe, the little amounts you pay daily are not refundable - nor is the often 25% VAT on car rentals, etc.
I'd happy save my receipts, which often break down the VAT paid, and feel i deserve at least a partial refund of the total paid. Maybe then we wouldn't find Europe so dauntingly expensive and even more travelers may flock there.
What do you think? VAT justified or not?

And when visitors come here do you suppose the taxes THEY pay aren't going to an infrastructure they will never "benefit" from?

I suspect you are picking up quite a few "bills" when you travel abroad and some of those "bills" may be helping make your destination an even more desirable place to visit.

no, I don't think it's a rip off. I don't think a tourist should have the attitude that they want special deals on prices and that a country's tax structure should cater to them. This is so selfish and self-centered, I can't believe it (sorry).

If you don't want to pay a high sales tax on things in supermarkets, don't buy them, nobody is forcing you to. Do you know of any tax in the US that is refunded to tourists or foreigners? I don't, but just wondered why you think that. Maybe you aren't aware, but some places do have very high sales taxes in the US on restaurant meals, hotel rooms, etc., and they are not refunded. I think they are around 10 pct where I live (restaurant meals). They even tax food in the supermarkets in Virginia, which I had never seen before in my life in the US (I don't live there, but work there).

Tourists should contribute something to the places I visit, they cause wear and tear on infrastructures, sites, and even problems, police, etc. There are tourist information centers set up, and those have to be manned and brochures paid for, etc. I know they think it is worth it in tourism revenue to do that, but I still don't think the idea that as a tourist, you should get all kinds of special tax incentives and rules is rubbish. I'm pretty leftie, though, and believe more in societal structure and contributions to it by everyone, not this idea of I'm special and only want to pay what I think I have used. Clearly, you are getting some value out of visiting Europe, also, which are are not valuing in your equation when you resent paying $400 to the tax coffers. I have no idea how you came up with that tab, by the way.

20% of $2,000 = $400

then why is there a VAT refund on high-priced items?

I see i'm going to get beat up on this - and let me restate my feelings - i don't mind paying a hotel tax for instance or a tourist tax even and i'd gladly pay a reasonable sales tax - 10% or so but to pay 20% or more - this mainly to fund health care, etc. i don't feel like paying too much. I'd like to pay what i owe for services used and not for services not used
- if i get sick in Europe i don't get free health care though maybe i should because i'm paying the VAT - these are benefits i don't get to use.
Well i can see i'm going to be seen as a grinch here but nothing ventured nothing lost. Maybe i'll rethink the VAT thing!

If you don't want to pay VAT, don't go to Europe. The actual percentage varies from country to country.

I agree with you, PalQ. Just traveling to the country---staying in hotels, eating meals, paying for shows, etc.---helps the local economy and businesses so that <i>they</i> can pay taxes. It would be most honest if they just charged a &quot;user tax&quot; when you enter each country. Then you are free to consume as you wish without the VAT.

I always make a donation to the free museums, because my tax dollars are not supporting those institutions. It wouldn't be out of line for them to charge a non-resident fee to enter, IMO.

&lt;If you don't want to pay VAT, don't go to Europe&gt;
A great example of intelligent discussion! Please read what i said and intelligently respond and not some blather &lt;if you don't want to pay VAT, don't go to Europe&gt;

This thread made me research how the Mexican nationals shopping at the outlet malls in San Marcos, Texas can get an instant refund of Texas sales tax. Here is what I found out:

&quot;Texas is the only state bordering Mexico that allows foreign buyers to seek a sales tax rebate while taking possession of the property in this country, by having a customs broker certify that the goods are leaving the country....A visit to an outlet mall in San Marcos provides an example. There, the customs broker provides refunds to foreign buyers so that they do not have to wait seven days to claim their refunds. Buyers assign their receipts to brokers who in turn collect the sales tax refund. Buyers receive their refunds on the same day, with the customs broker collecting from the retailer later.&quot;

This info is from a website that is trying to change the system in Texas. I've always thought that the outlet malls make it way too easy for foreign nationals to get their sales tax money back...they actually have on-site refund offices at the outlet malls. I figure that if it was not so easy, lots of folks would just go home and forget about trying to get the tax back.

Hmmm... I figure, they used our roads, drank our water, used our bathrooms - i.e. got the beneift from some of the things the sales tax pays for. The folks in Europe probably feel the same way about us.

&gt; It's always kind of galled me that on nearly every purchase i make in Europe there is a ridiculously high VAT often tacked on and in fact hidden in the purchase price.

It is not hidden - the sum you are paying in VAT is always on your cash receipt.
It is extremely unnerving to arrive a t a shop in USA or Canada, see the prices and then pay a completely different sum because the local taxes are adding 5 % here and 8% there and whatever.

&gt;I'm paying for their liberal welfare systems, medical care, etc. - all things i'm in favor of and wish we had in the US but i don't feel i should pick up the bill for it in Europe.

And exactly this is the reason you get the VAT back when you leave the country. But not on food and such, of course - there is no difference in you, an American, visiting a restaurant and me, an European, visiting the same restaurant. After all, if you, an American, have a car accident or catch a flu while in Europe you will have access to the same health care as me, an European, in the same situation. And if you want to get from Paris to Cologne by train you are using the same infrastructure as me.

&gt; - if i get sick in Europe i don't get free health care though maybe i should because i'm paying the VAT - these are benefits i don't get to use.

Me (and most Europeans, except the Brits) neither. Most people pay into some health funds/insurances system (the system differs from country to country) where the money that pays for the health care comes from. If somebody found a way not to pay into those funds s/he wouldn't receive &quot;free&quot; health care as well.

You're entitled to resent whatever you like. But I'm not clear where it gets you. You presumably don't have a vote here, so what you approve of is of absolutely zero significance.

However to describe a tax which is charged on everyone, but rebated only to foreigners, as a &quot;tourist ripoff&quot; is simply preposterous.

And from someone who seems to have earned his living by writing about Continental Europe's lavishly subsidised public transport system - and seems still to use it more than most full-time taxpayers - it's both hypocritical and preposterous.

PalQ - that tax is also paying for things such as roads, subsidized public transport, free museums, up keep of parks etc - which you likely are using.

At least in most countries the tax is included in the price - wish THAT would migrate to the west side of the pond.

Also I think in many countries you don't pay VAT on most food in supermarkets.

I think that one of the reasons you are &quot;going to get beat up&quot; is because most folks disagree with you. That doesn't mean you have to change you opinion and it doesn't mean you are a &quot;grinch&quot; (interesting term you picked).

So far I think you've gotten just what you should have expected from a post such as this: differing points of view and perhaps a little more 'explanation' as to why things are the way they are and ones anyone might do well to consider.

&lt;After all, if you, an American, have a car accident or catch a flu while in Europe you will have access to the same health care as me, an European, in the same situation&gt;

Is this true - then why should seniors buy supplemental medical insurance coverage when American elders go to Europe since our Medicare apparently doesn't cover folks in Europe - you are saying that we will get free medical care same as you? If so i'll gladly pay an even higher VAT. I know not all medical care is free in Europe but often is. Maybe i misconstrued what you meant.

Am sure that I read a thread recently on this Board from an American whose child was sick while in the UK and got free emergency medical attention. I was quite surprised

I'm ready to retreat and call a truce. Flanneruk - i use railpasses that i pay lots of bucks for - if the rail systems are losing money it's because of the online discounted fares that others, but not me buy. If you believe like many posters here that railpasses are a rip-off for what they actually get you then you'll see i'm subsidizing, with my eurailpass purchase, at an allegedly inflated price, Europeans on their train trips.
The US is the world's largest tourist country and i think we should, as to all the reasons given here to why i should gladly pay VAT, charge at VAT for tourists so that they pay their fair share, which obviously they do not at the usual 6-10% sales tax on goods - noted that hotel taxes can be higher.
This tourist tax could be collected at the airport upon entry - based on what typical tourists pay.
I guess that's my main reason for opposing the steep VAT - again i gladly pay for what i use
So i guess Europeans will think they are getting an unfair free ride when they go to the States with their low sales tax only. Perhaps a voluntary payment of a steeper taxes would salve their aching consciousnesses.

Hi P,

&gt;i don't mind paying a hotel tax for instance or a tourist tax even ...&lt;

You don't? How else would you describe that other than as a rip-off of tourists?

And then you complain that you are paying the same taxes that the locals pay?

&gt;...you are saying that we will get free medical care same as you?

There is no &quot;free&quot; medical care. It's paid for through taxes, insurance companies or at point of service.

From what I have read here, and my own experience, Europeans are much more liberal in providing emergency medical care to tourists than we are in the US.

Has the heat gotten to you today? :)

((I))

Wombat7: I used to own a bike touring company and in Europe the times when we had an injury requiring medical attention we went to the local hospital and almost always were never charged a pence - including in the UK. I don't think this is the law but the hospitals often said that they just didn't have any facilities for taking payment so let it slide.
Now if the word gets out we'll have lots of sick flocking to europe for free medical care!

Ira: it's a muggy 98 degrees here and obviously, along with me not taking my meds, affected my thinking! (See affected should have been effected.)
I wonder what Rick Steves thinks about VAT?

That's what I thought PalQ - so perhaps your VAT &quot;rip-off&quot; is just a way of paying that back.

On a separate note I quite like the dual pricing system in some countries - a lower price for locals and a higher price for tourists becuase they can afford it.

PalQ RS probably thinks its okay as long as you pay for your Coke with lunch with TC and wear bright white sneakers!

Many years ago in Copenhagen one of my classmates was in a car wreck while on an outing with our school. She was the only person badly injured and was taken to a local hospital with broken arms and a serious head injury. This teenaged girl was given the best of care for 3 weeks. She was in a coma and could not be moved until she came out of it. Her parents couldn't be located (dad was a very well-known singer on a world tour, mom--well, nevermind) for two weeks, then they decended on the hospital with a retinue that included a doctor. They tried to pay the hospitals and their money was flatly refused. She finally went home after about a month in the hospital, recuperated for a few more months and is now a successful actress.

They would have taken the same care of her had she been a poor girl backpacking through Europe. I will never, ever, forget the kind physicians sitting in the cafeteria with the head of the school, having a beer with him and talking about her prognosis.

Yeah, Wombat, but unlike you, RS gets paid to DO it!

Flanneruk: I've organized bike trips that brought several thousand Americans to Europe for over a decade and each spent a whole lot there - including oodles of VAT - i'm probably more responsible for more VAT taxes than you'll ever pay in your lifetime!

Dukey - Wombat - please, what is RS? National health system? Sincerely.

If you feel you are being ripped off, stay home. The tax isnt hidden from you. Its added in for everyone , not just tourists, so its not sneaky. If you arent informed and dont know you are paying it thats your problem.

RS=Rick Steves - was making comment on PalQ's reference to the other hot thread of the moment

&lt;If you arent informed and dont know you are paying it thats your problem&gt;
try reading what i said before criticizing: &quot;my receipts, which often break down the VAT paid&quot; - i know exactly how much VAT i pay because it's invariably broken down on all receipts - be it BTW, VAT, etc.

I can't see how a tax that is levied on everyone is a tourist rip-off, or do you labor under the delusion that the local citizenry does not pay the VAT? If anything, the VAT is skewed in favor of the tourist, as you can, to some degree, get back the amount you paid when you remove the goods from the country.

A tourist rip-off would be a tax that is levied only on tourist activities, and in the US we frequently levy bed taxes and various airport taxes, which are easy to get the locals to support because we know we, or at least we who don't travel, will not have to pay them.

Actually, there has been some talk of replacing the federal income tax with a federal sales tax, the equivalent of a VAT. It is said to be a way of encouraging savings (putting some of your money in a bank or CD, for those Americans who are apparently unfamiliar with the term) by taxing only consumption, but the talk usually stops when someone points out how high a percentage would be needed, higher, perhaps, than even the European VATs.

I think it is interesting that European medical facilities often don't charge, even for tourists. Apparently they confine their activities to practicing medicine and don't have the huge and expensive bureaucracy we have to process payments and insurance. I'm really hostile about this now, as my wife has come to have two insurance plans, and they have huge staffs that spend their time pointing a finger at each other while declining to pay for services. I spend my days keeping records, refiling claims, initiating appeals, and giving the finger to both of them.

VAT is simply sales tax - and every place has it. I prefer it included in the cost - then you know the total you're paying, versus in the US when you end up paying 8% more for everything once they add it on.

As for the amount - these countries have decided to fund healthcare and education for their citizens - which we do only marginally. Yes- the citizens get the benefit - just as we get the benefit when europeans here pay sales tax.

If you prefer not to pay VAT - dont go to europe.

&gt;Is this true - then why should seniors buy supplemental medical insurance coverage when American elders go to Europe since our Medicare apparently doesn't cover folks in Europe - you are saying that we will get free medical care same as you?

If you would have read my subsequent post you would see that also Europeans DON'T get free health care, at lesast not in most countries. In UK; as well as in Scandinavian countries, they do; then also you, as an American, would get it - at least if you were not able to be transferred. In others, like Germany, France, Switzerland etc., there is NO FREE HEALTH CARE except for the very needy; the citizens HAVE to pay into a special fund/&quot;insurance&quot;, which is managed by, on behalf of, or at least with significant interference by the government; since you, as a tourist, don't pay into this system you are not covered by it. (Keeping politicians' greedy fingers out of this pot is another eternal fight around here)

Alta - when you say that citizens have to pay into a special fund - how does that work. For example, two parent family, one parent works, two kids - who has to pay into the fund?

PalQ, having a bad day? I am not used to read such posts of yours. Must be the heat!

Please be fair to Europeans! Example Germany: VAT is 16% (next year 19%), but for food and goods which are essential for living it is 7%. So especially in supermarkets/groceries you are only charged 7% for the most things you buy - and that is pretty similar to the sales/local taxes in the USA, right?

The medical system is almost exclusively financed by employers/employees in Germany (health insurance paid from the income). Not with taxes.

Taxes are spent for many, many things. A big part goes into the welfare system, but also for military, administration costs etc.

You should consider the VAT you pay as a contribution for security (police!), emergency rescue service, the efficiently working public transportation system (yes, a big part of the taxes goes into building new railroads, tunnels, buying buses, railcars etc. and of course roads!) and such.

In a family, the person who earns the money has to pay, the others (kids) don't. Someone with no family has to pay the same amount accourding to his income, so
1) single people pay more
2) families less
3) more income equals higher premiums
for the same medical care.
4) employer pays one half for you
5) self-employed pay full rate, but tax deductable
6) (500-600&euro;/ month are a &quot;normal&quot; rate)

Logos - thanks for the information. If you aren't employed do you still get coverage?

Ingo: your nicely worded reposte has really made me rethink the whole thing. And I wish Fodors had a tool where the OP could UP (Un Post) something that turned out to be not so well thought out - what i thought may provoke some discussion has proved to be universally condemned and your post especially says why i'm wrong. I should learn not to post things that can arise passions and then i get defensive and make retorts to folks i respect that i then regret.
ANYWAY - LET'S END THIS THREAD with my humble retraction of my OP - as they say in French ca y'est i believe.
sincerely, PQ
P.S. I should have learnt my lesson from one post i made about churches charging admission - i was roundly grilled on that too, and rightly as well.
I do like to raise questions for intellectual discussion but not ones and will keep doing so but not ones that make me look like a GRINCH!

Last word - but the collateral discussion of health care this post caused, as in the two above posts by Logos and Wombat are the type of thing that i find interesting and which is one big reason i find Fodors so great - the Europeans who explain things that are not apparent to tourists.

PalQ - thanks for the interesting post. Made me think about how countries fund expenditures - ie income tax, sales tax, tourist visa tax, health tax, property tax, death duties etc.

PalQ, be sure I did not want to &quot;grill&quot; you ;-) I appreciate your many informative and helpful posts. And I admit the VAT might be confusing and annoying at first sight for a tourist.

Back to working on my trip report.

PS: feel free to email me if such questions occur. You have my email, don't you?