More Rules, More Regulation. All the Time

We used to think that running a small business, particularly an online one, was easier than operating a large bank, a licensed pub, or a commercial passenger transport enterprise. With the advent of sales tax (in America) and “value-added taxes” in European countries starting in the 1960s, all this began to change. Gradually at first, then more rapidly.

The European Union’s latest foolishness has resulted in a situation and consequences that even EU bureaucrats themselves, as per their own admissions, failed to understand at first and only fully got in the weeks and months after the new rules went into effect. Although they are now at least beginning to understand that the extent of the damage caused goes far beyond their original idea of further increasing tax revenue on the back of e-commerce businesses, they are now unwilling to rectify the situation they caused.

Beginning on 1 January 2015, each and every business (not only in Europe but also overseas where Eurocrats have even less business messing with the livelihoods of ordinary, law-abiding people) has to pay European local taxes when selling digital goods to anyone happening to reside in a European country. The precise tax rate depends on the location of the buyer and usually ranges from 17% to 25% or even a whopping 27% (in the case of EU member country Hungary).

Not a small sum of “protection money” to be paid, particularly if you’re a non-European person and do not have to expect protection (nor tyranny or rip-offs) from European governments. Plus, even the Cosa Nostra of Sicily always limited itself to operating locally — not worldwide. (The latter would usually be called an international crime cartel or organized crime but it is apparently “okay” when governments do it.)

In order to stay compliant, even the smallest businesses today need to comply with tax rules of a total of 31 countries throughout the wider EU and EFTA areas on top of their own domestic ones. This is a wholly unacceptable burden caused by out-of-control bureaucrats who have become all-to used to being fed fat salaries and pensions funded by taxpayer money instead of going out and earn their own incomes and take care of themselves.

Not surprisingly, a pressure group protesting these abuses of power on the part of unelected bureaucrats has been set up in order to have these onerous rules reversed and small businesses freed to do what they do best: finding a need, filling it, and earning a legitimate profit in the process providing for their owners, families (and even tax collectors) along the way.

It appears that governments and their finance “experts” have all of a sudden forgotten that that’s the way it works and that they themselves would have to close shop in a matter of weeks if neglecting this reality.

As a result, large e-commerce corporations like eBay or Amazon were initially set to be the only ones able to handle the compliance load required. Offering their users or “Marketplace” sub-sellers a turn-key fix to the mess caused be regulators, they were first set to profit massively by luring even more small online sellers into their “attractive solutions” to a problem that should have been wholly unnecessary in the first place. A few weeks later, a number of smaller and more independent services have sprung up though, offering small businesses mom-and-pop operations, and individual websites the same level of service with Plugin solutions for widely-used CMS and e-commerce engines such as WordPress and Woo Commerce and similarly popular solutions. Like it or not, Eurocrats have created an entire new market for accountancy, legal, and similar services supporting small and independent online sellers with their — entirely not asked-for — compliance needs. Their Plugin solutions may or may not carry a price tag for installation and use, or the actual services rendered will, but one way or other the overall cost of doing business and staying “compliant” has increased again — a cost of doing business that, like any other, will sure be passed on to buyers and increase overall prices again. All that during times of “economic crisis” when any economy needs relief rather than further hindrances. We will all see one day if this is going to end well, but one might be forgiven for doubting it.


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