VAT as it effects the USA

Well.....anyone else encountered this happy little result .... the sim that my 2 plots are located on.....is owned by a Europian....so he is raising all tiers to reflect the VAT. Joy... I am a US citizen....but apparently I will now also be 'taxed' as it were.....due to the owners decision to raise his tiers. I have just finished re-doing my main house.....but I am seriously considering selling my plots and finding a residential area owned by someone who is not paying VAT. Anyone else seeing this happen?? *sigh*

Not yet for myself, but that was the first thing I thought of when I heard about all this. I have no idea if my landlord is European or not, just waiting for the shoe to drop
Ashe

We knew it was a distinct possibility. It doesn't make much sense being a Landlord that doesn't recoup their costs - unless they are in it just to give everyone else a free ride. Their only real options are:
1) pass the increase on
2) accept a loss
3) get out of the business

Well this is only logical - They whole business is based on how much money they make vs. How much money they have to pay.

If they are in the land leasing business - then they have to raise their prices accordingly.

And yeah this means that non Eurpean Land owners have a pretty big edge now.

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Think about it if the real world had instant world wide teleportation and no wars - people would live wherever they could that was cheapest - that provided the quality of life the wanted.

You could have a house in some pristine coastland of Africa that would cost 1/100th what coastland in New England does. And then just TP to work or shopping or visiting friends.

This was always going to happen. Its a mess.

To be fair the EU player does not really have a choice to raise the prices as its a hell of a jump for some estate owners. Whilst there is a profit in renting out plots in a sim, its not huge and I doubt it could of accommodated the VAT hike the owner has just been hit with.

I can see both sides here as a Brit and as a renter now. Its a whole mess and I would not blame you if you decided to look elsewhere, but on the other hand I understand why the owner has done it

I see both sides too...and I feel for my LL (his tier prices were already high tho...his edge was in selling the land cheap initially)

It's sad..I knew a few land owners based in the UK and it's going to seriously effect their ability to miantain their sims....which is a shame for the rest of us who enjoy them. I can see there's a risk in going strictly residential...... perhaps adjusting the covenant a bit could help boost profits. I love my property.....would hate to do it all over again.....but SL is just a source of entertainment and escape....I can only justify so much $$$ into it before it becomes not worth it. LOL and i was THIS close to buying a 3rd plot.....NOT.

The EU players could decide to band together and subsidize one another by voluntarily paying higher rent and tier to each other -- in other words, kind of create an (albeit voluntary) "EU" within SL, rather than trying to go head-to-head in competition with the non-European landowners, where it will be very hard to compete economically.

Well, speaking as a British island owner, I've pretty much decided to go with Twosteppin's option (b) and swallow the cost [shameless plug] I have about 7/8 vacancies on my 6 sims; if I could get them all rented concurrently that would help A LOT! [/shameless plug].

That said, it would be helpful if fellow Euros didn't move out of the VAT zone in hordes, or even looked at positively renting in a Euro sim.... but I couldn't blame anybody for looking to lower their costs. And maybe there's a rich Yankee out there I can fleec......er, welcome
Inc

But which continent would become Europe?

As to the original post...... i reckon that kind of thing is inevitable. Seems people are being hit hard, especially if they own a lot of land.

I'll raise rental prices for plots that aren't rented but I won't raise prices for existing tenants. As people move on to other places, then i'll raise the prices.

The tier increase will also happen on US owned private sims, I'm sure. When EU-owners raise their prices, then US owners will do the same or a little less lower, because it generates extra money for them, although their costs stay the same. It's simply marketing.

Exactly.. Many will see this as a chance at 20% more profit. However they still have to compete with mainland as well. I have noticed alot more mainland rentals lately.

This may be a silly question. In the US if we have a resale license we don't have to pay any taxes on items we buy for resale. Is it the same in the UK, I don't know their laws. If parcels on the island are up for sale and the owner has a resale license then he/she should not have to pay any taxes. However they seller would have to charge the taxes on any sales if the buyer lived in the UK or Europe if that applies. One more question, why on earth would you have to pay the taxes more than once on the land that you bought. That one doesnt make any sense to me, but then I don't know the laws. Oh oh, they may make you pay property taxes though. Wonder how they would do that one.


Wouldnt that be cute, applying for a business license to buy and sell on SL. Trot right down and get yourself one right now after you check the laws of the UK. Can't you just see it, filing a sales tax form every month for SL. At least after all of the parcels were sold you would be pretty much done with it if you just bought a new sim. Such a shame there isn't a grandfather clause in this whole sceme of things.

Not sure about that. In the context of the current land glut, I don't see a high tolerance for raised tier/rents, to be honest. I think it's more likely that the European owners will be priced out of the market, than for the non-EU landowners to immediately raise their prices, given the pressures on land pricing overall at the moment.

US players... watch this space in November when you are likely to get hit with the same crap as we just have here in Europe.

http://arstechnica.com/news.ars/post/20070921-as-deadline-looms-senate-still-debating-fate-of-internet-tax-moratorium.html

"As the expiration date on the 1998 Internet tax ban draws near, pressure is on the Senate to compromise over just how long it will be extended. If the moratorium is not extended, prices for Internet service nationwide could jump—as high as 17 percent, some ISPs claim—once November 1 rolls around."

Broccoli

In all likelihood it will be extended, as it was earlier -- but of course that could change. If it does, then how much tax we pay our ISPs would depend on what state we live in, but I think that the ISP's claims of 17% are wildly exaggerated.

Why doesn't LL just raise the price of American estate owners as well? Just to even out the playing field. LL can just pocket the money they get from Americans while they hand over their European VAT over to the governments in Europe.

*ducks from rocks being thrown*

What is the justification for that? Why should non-Europeans pay more for SL because of the tax laws in Europe?

The brotherhood of man, workers of the world unite and all of that other socialist claptrap that the Euro's seem fond of?

Just a thought .. but how can you be sure the Owner is from the EU?

I imagine a lot of US based sharks (yes they exist in all countries thank you) will see this whole VAT fiasco and raise their rental fee's pretending they pay VAT just to get extra income.

Juat a thought .. but you can bet it is gonna happen.

It's an election year coming up, no politician in their right mind would vote for such a thing with hopes of re-election. They do it =after= being elected.

Let them raise their fees, someone else will undercut their price and they will loose renters. The free market works every time.

Unfortunately i'm a Euro Sim owner that has had to raise its Tier and rental charges to its existing residents. Had no choice really, it would not make sense to hold onto these SIMs for such a small profit margin....otherwise it would be wiser to invest the 10k USD into something else less stressful for a similar return. (A UK 90-day savings a/c would probably yield a similar return if i absorbed the VAT costs)

However unlike Linden labs that has already caned 2 of my SIMs with additional VAT charges hours after informing via Email.......i won't be implementing the change until Dec 07, allowing existing residents around 2+ months to sell their lands should they find the increases unacceptable. On average i'm adding an $1 per 2048 sq/m plot.

I won't be buying any more SIMs or plots on Mainland......my next move is likely to be a sell off, should i end up with empty SIMs


Basically we can no longer compete on a level playing field. It's a sad day in Second life's
chapter and one that will have severe impact on it's growth.

Oh great, now I have visions of bad seventies clothing and "save all your kisses for me" in my head! Cheers Chris!

Turns out my landlord is European and exiting the business, so I get hit indirectly because I have to vacate.

There will be an outrush of Euros from landowning and into land renting, and those Euros who came into RL for playing real estate mogul will likely exit SL, incidentally taking their purchasing power with them.

So rental prices may hold up for a while - who knows? maybe even move up a bit? - but in the end a lot of that cheap land the Euros dump will be recycled into new rentals that will eventually drive rental prices down in a somewhat diminished economy.

This is a great if unpleasant lesson in Economics 101 - taxes drain from an economy and depress it. If the taxes go to wants and needs that compensate for the cost, ok. But the European VAT is not going to be spent on serving the wants and needs of SL, so it wil be a pure depressant on SL. Whatever contribution this sacrifice of SL makes to the quality of life in Europe is probably going to be too small to be visible, yea, verily, unto the tenth beyond tenth decimal place.

More generally speaking, taxes have a tendency to enhance the quality of life of government bureaucrats and self-serving politicians, and whether what is left over from that adds to the quality of life of the taxpayers is a very interesting question. But in SL, the answer is clear and easy: Baby, if you're in SL, you got raped by the EU, worse if you are subject to the VAT, less if you are only subject to the depressant effects on SL of the VAT.