Prices in the UK vs. Canada
November 10, 2004 5:31 PM Subscribe
Economics 101: Why is everything so expensive in the U.K.? Why is everything so cheap in Canada?
You think things are expensive in the UK? Try Ireland..
Anyway, for a start, in the UK, there's VAT (value added tax) at 17.5% on pretty much everything. Sales tax in the US isn't usually that much, I think..
posted by ascullion at 5:55 PM on November 10, 2004
Anyway, for a start, in the UK, there's VAT (value added tax) at 17.5% on pretty much everything. Sales tax in the US isn't usually that much, I think..
posted by ascullion at 5:55 PM on November 10, 2004
Best answer: I am not an economist, but...
It's partially that, and partially economic relativity... the same thing that makes increases in the minimum wage mostly stupid without other economic controls.
Economic relativity is the fact that, regardless of currency, you make a certain amount of buying power in a year. Someone else in a more 'advanced' economy, like the US or Europe, makes more buying power in a year. Certain base commodities, (I've noticed that the price of a can or bottle of soda is one of the first to move, at least in the US where we drink it like water) cost a certain percentage of local average buying power no matter where you are.
Therefore, as a canadian in britain, it would cost you a higher percentage of your domestic buying power to purchase something in britain. (this is also why bread and gas are more expensive in affluent or urban areas than it is in rural areas.) Then you add local taxes, which are usually higher in more 'progressive' or 'advanced' areas, and you've got a much higher price.
Why is it that way? There's a lot of factors besides taxes, but that's a healthy part of it. Every single bit of raw materials that goes into the products you're consuming is taxed at a certain percentage (i.e. when the material is extracted and sold, and then again when it's manufactured and sold, and then again when it's wholesaled to the retailer, and then again when the retailer sells it to you) ... so a 1% higher local tax means that you get a disproportionate increase in price. (This, of course, is also why business tax decreases help to boost the economy ... and why just about every small business owner voted for Bush, because Bush promised not to tax them out of existance, unlike Kerry...)
Americans living and working overseas in places like Australia and Asia love this if they're paid in $US ... their buying power can be like a bazillion times what it is at home. Conversely, that's why it's really really tough to make it by moving upstream into an advanced economy unless you're young and aren't supposed to have any assets collected.
I love economics because it's woven into everything if you can follow the threads.
posted by SpecialK at 7:06 PM on November 10, 2004
It's partially that, and partially economic relativity... the same thing that makes increases in the minimum wage mostly stupid without other economic controls.
Economic relativity is the fact that, regardless of currency, you make a certain amount of buying power in a year. Someone else in a more 'advanced' economy, like the US or Europe, makes more buying power in a year. Certain base commodities, (I've noticed that the price of a can or bottle of soda is one of the first to move, at least in the US where we drink it like water) cost a certain percentage of local average buying power no matter where you are.
Therefore, as a canadian in britain, it would cost you a higher percentage of your domestic buying power to purchase something in britain. (this is also why bread and gas are more expensive in affluent or urban areas than it is in rural areas.) Then you add local taxes, which are usually higher in more 'progressive' or 'advanced' areas, and you've got a much higher price.
Why is it that way? There's a lot of factors besides taxes, but that's a healthy part of it. Every single bit of raw materials that goes into the products you're consuming is taxed at a certain percentage (i.e. when the material is extracted and sold, and then again when it's manufactured and sold, and then again when it's wholesaled to the retailer, and then again when the retailer sells it to you) ... so a 1% higher local tax means that you get a disproportionate increase in price. (This, of course, is also why business tax decreases help to boost the economy ... and why just about every small business owner voted for Bush, because Bush promised not to tax them out of existance, unlike Kerry...)
Americans living and working overseas in places like Australia and Asia love this if they're paid in $US ... their buying power can be like a bazillion times what it is at home. Conversely, that's why it's really really tough to make it by moving upstream into an advanced economy unless you're young and aren't supposed to have any assets collected.
I love economics because it's woven into everything if you can follow the threads.
posted by SpecialK at 7:06 PM on November 10, 2004
I was earning the exact same in-figures amount as my American friend, and we ended up with roughly the same amount in cash at the end of the month. So bread cost us both 80 small currency units, and a night at the cinema could be had for 10 large currency units. This, of course, makes it top when I go to the US - double the money! - and terrible when they come here.
posted by bonaldi at 7:11 PM on November 10, 2004
posted by bonaldi at 7:11 PM on November 10, 2004
It also depends very much on where in Canada you're talking about. Toronto is not Winnipeg is not Yellowknife.
posted by loquax at 7:28 PM on November 10, 2004
posted by loquax at 7:28 PM on November 10, 2004
Location, Location, Location... the U.K. is a large island country that depends on the import of foreign goods (Canada also depends on the import of foreign goods as well for that matter) but since the U.K. is an island goods must in most cases be shipped via sea into the country, whereas in Canada goods can be delivered by simply driving a truck over the border.
This is just one reason, I'm sure there are far more complex explanations...
posted by mhaw at 8:47 PM on November 10, 2004
This is just one reason, I'm sure there are far more complex explanations...
posted by mhaw at 8:47 PM on November 10, 2004
Domestic market forces, international market forces, domestic law, domestic tax policy, culture, and demographics affect prices (among other things).
So, for example, gas is expensive in the UK due to tax policy influenced by demographics (too many people in too small an area). Cars used to be significantly more expensive in the UK due to culture, people were used to paying X.. but then everyone worked it out, and now we pay far less.
Groceries, however, tend to be cheaper in the UK, due to the UK's proximity to Europe, its intensely fierce internal competition between grocers, and its status as a major hub for international cargo.
It's all forces at work..
posted by wackybrit at 10:26 PM on November 10, 2004
So, for example, gas is expensive in the UK due to tax policy influenced by demographics (too many people in too small an area). Cars used to be significantly more expensive in the UK due to culture, people were used to paying X.. but then everyone worked it out, and now we pay far less.
Groceries, however, tend to be cheaper in the UK, due to the UK's proximity to Europe, its intensely fierce internal competition between grocers, and its status as a major hub for international cargo.
It's all forces at work..
posted by wackybrit at 10:26 PM on November 10, 2004
Riddle me this:
I'm in Australia. Our dollar is worth ~US75c, and our economy and population are puny compared to the US (GDP US$518b, pop. 20m). How come, even if I have to pay shipping, even when the exchange rate is lousy, even if I get hit for GST and customs duty, it's still way, way cheaper to buy books, DVDs and perfume / cologne over the net from the US?
posted by obiwanwasabi at 10:30 PM on November 10, 2004
I'm in Australia. Our dollar is worth ~US75c, and our economy and population are puny compared to the US (GDP US$518b, pop. 20m). How come, even if I have to pay shipping, even when the exchange rate is lousy, even if I get hit for GST and customs duty, it's still way, way cheaper to buy books, DVDs and perfume / cologne over the net from the US?
posted by obiwanwasabi at 10:30 PM on November 10, 2004
There's a lot of factors besides taxes, but that's a healthy part of it. Every single bit of raw materials that goes into the products you're consuming is taxed at a certain percentage (i.e. when the material is extracted and sold, and then again when it's manufactured and sold, and then again when it's wholesaled to the retailer, and then again when the retailer sells it to you) ...
?
Where I live, tax is only added in the last stage, from retailer to customer. When businesses sell goods or services to other businesses tax is never added. If tax was added every stage in the supply chain, prices would escalate beyond what anybody would be able to pay.
posted by Termite at 10:43 PM on November 10, 2004
?
Where I live, tax is only added in the last stage, from retailer to customer. When businesses sell goods or services to other businesses tax is never added. If tax was added every stage in the supply chain, prices would escalate beyond what anybody would be able to pay.
posted by Termite at 10:43 PM on November 10, 2004
This thread is closed to new comments.
posted by nylon at 5:50 PM on November 10, 2004