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Comment by crazygringo | Hacker News Reader

I don't know what you mean.

The US doesn't have VAT, it has sales tax, which varies geographically by a great deal -- even between neighboring cities.

And advertised prices in the US virtually never include sales tax (in large part due to that variation).

Hotels and ticket brokers aren't getting any kind of free pass, they're advertising prices in the same way as everywhere else like grocery stores or Amazon -- at least as far as sales tax is involved.

Literally the only locations I've ever encountered that include sales tax in the price are a tiny minority of coffee shops (often cash-only) and budget pizza places (often the dollar-slice ones), which is to avoid having to deal with coins.

(The article is about other fees though, which is a different subject from sales tax.)

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As an American who has lived abroad a fair bit, I can confirm that the American approach seems deranged if you're used to prices that match what you will pay.

I mean, it certainly does seem that way.

But the problem is that right now a supermarket chain can advertise in the newspaper that chicken breasts are $4.99/lb at all of its nearby locations.

If sales tax were included, you couldn't advertise prices at all, because they might be different at each store!

How could Apple advertise the price of a MacBook, when sales tax is 0% in New Hampshire, but 8.875% in New York City, but 4.5% in Yonkers just north of NYC? That's a price variation of around $100–200.

Fair point on the advertising. Perhaps a good compromise would be to mandate displaying the price with the taxes included in store/on the website so what you see is what you get when you checkout with no bad surprises.

VAT rates in Europe differ too but it doesn't seem to cause any issues with advertising :)

What are the boundaries where VAT rates change? Within the US, there can be state + county + special tax district in the county + city + special tax district in the city.

That may not be super sensible, but it is how it works. A business on one side of the street may have to collect taxes at a much different rate compared to a business on the other side of the street.

That's because VAT is nationwide.

You already have to produce different ads in Spanish, Italian, German, etc. So it's not really any extra work to have different prices in each.

Plus you're only dealing with tens of countries. There are literally thousands of distinct sales tax geographical areas in the US.

Plenty of things vary by location. Rent and wage have a bigger impact than sales tax on the final price in a supermarket. Yet they are able to coordinate sales prices even when the rent varies a lot, because anyway those are loss leaders and then the rest of items get the proper markup and differentiated prices depending on the location. Just like you have items in the RU with the same promotion prices in countries with 15% VAT and countries with 25% VAT, usually because you want the nice rounding at, say, 399.

That's not really true as a general rule. Grocery stores, for example, have an average profit margin of just 1–3%.

Attempting to maintain the same final prices in one town with 3% sales tax and a neighboring one with 8% sales tax simply isn't workable.

I mean, sometimes it's fine for extremely high-margin electronics, or things like cell phone service where marginal costs are low, but it's definitely not the case in general.

That's the profit margin across all products. Consumers are not rational (or at the very least, not infinitely knowledgeable and able to use that knowledge instantaneously), so you would absolutely expect effects like charging 4.99 rather than some tax-adjusted number like 5.18 to translate into real profits.

Individual items can have >100% markup, there are items sold at a loss to ensure you can complete your trip at a single store or get you in the door or whatever, and the store absolutely has to consider how revenue (not just line-item profit) plays into things to balance out rent and wages and whatnot. 1-3% profits for the store don't imply much about what you need to charge to offset the effects of sales tax.

As a brief example of irrationality, last I checked, on like-new iPhones it made a 30% difference in total revenue to offer "free" shipping rather than split it out as a separate line item. People would really rather pay 1.3x with "free" shipping than 0.8x base price and 0.2x shipping.

I don't, and will never understand this argument, because here in Europe, the Tesco in my town centre has a different price for the exact same item to the Tesco Superstore on the edge of town which also has a different price to the little Tesco Express down the road.

Somehow this all works magically here but in the US it is impossible because.. reasons unknown

So where you live there are no standardized prices by any chains at all for anything? No prices are ever advertised anywhere?

You're drawing an unwarranted conclusion that just because not all prices are coordinated, therefore none must be.

If you consider that, I believe your reasons unknown become reasons known. No need to resort to magical thinking :)

Are hotels unaware of where they are located and so unable to determine their prices? I'm pretty sure that the cause of the collapse of the Pax Americana at this point will be the willful conflation of American Exceptionalism into learned helplessness.

See my sibling comment to understand.

Also it's not just about the hotel location, but also changes depending on the buyer's location -- which of course often isn't known until the checkout process.

So maybe it's not quite so simple, with so cartoonish a villain, as you assume.

Is it so complicated that only Europeans can do it; Americans are too unintelligent to match?

Please stop being rude and chauvinistic.

If European countries chose to have VAT that varied geographically within a country, they wouldn't be able to build it into the price either.

Why you think it has anything to do with "national intelligence" is quite beyond me.

Well…they do… https://taxfoundation.org/data/all/eu/value-added-tax-2023-v...

No they don't.

That clearly shows rates varying between countries.

Not within a country.

Which is fine, because prices are generally advertised within a country, not Europe-wide.

You're showing tax variations across countries. I see tax variations within a couple of miles!

I'm curious where you have ever seen a national advertisement for a hotel room that includes a price; it is not something I've observed but perhaps my chauvinism has blinded me. That said, do you think that a hotel company is able to calculate the price of a room when I go onto their online portal and request a price for a particular location and date?

The usual strategy is to nationally advertise "as low as" some base $$ amount. And then you go into the online portal and come up with an actual price for an actual date that (hopefully) includes all taxes and fees--and is probably a fair bit more.

Perhaps the Americans chose poorly.

In certain states, some customers such as disabled veterans are exempt from hotel occupancy tax. So the tax rate isn't necessarily the same for everyone.

When I book hotels/rental cars/etc. online, you can usually see what the all-in price is going to be. But when comparison shopping, you have to keep an eagle eye out because the difference between all-in and base price can be 25% or more. (Also pre-pay/no cancel vs. paying at arrival and having some ability to cancel.)

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