Impact of VAT in Europe

Increased Costs for Imports: New customs taxes, such as a €3 fee per item category, significantly increase the cost of importing goods, making affordable items expensive. "To make it worse, AliExpress counts each reference as a different category. Hence it's 3€ per item."

Challenges for Small Businesses: Businesses relying on imported components, especially for repairs, face higher operational costs due to VAT and customs fees, which can hinder their ability to compete. "Most small repair businesses depend on importing IC-s and other components."

Reduced Purchasing Power: High VAT rates, sometimes exceeding 20%, reduce consumer buying power, making goods less affordable. "With shrinking buying power, people becoming poorer and poorer, just slapping a 3EUR customs fee on everything is hardly the a good policy."

Disproportionate Impact on Lower Incomes: VAT is considered a regressive tax because it affects lower-income individuals more, as they spend a larger proportion of their earnings on goods and services. "Because lower-income people have to spend almost everything they earn just to survive, they end up paying that 20% tax on nearly every dollar."

Contrast with Progressive Taxation: European tax systems, while relying on VAT, tend to have flatter taxes compared to the US, where the wealthy shoulder a larger share of income taxes. "The European System: They have "flatter" taxes,meaning the middle class pays significantly more than they do in the U.S., but they use that money to fund massive, universal social programs."

Funding Social Benefits: Despite its regressive nature, VAT contributes to funding universal social benefits like healthcare, which is often cited as a trade-off. "But free healthcare and proper social benefits when you lose your job in return. Its gotta come from somewhere"

Ineffective in Fostering Local Manufacturing: Users argue that current VAT and customs policies fail to stimulate local manufacturing and instead primarily benefit middlemen or large retailers. "This tax, will do nothing to build manufacturing in Europe, only will enrich the middle man in Europe (aka Amazon, etc)."

Protection for Established Businesses: Some Users believe that VAT policies are designed to protect the profit margins of established European retailers by discouraging direct consumer imports. "The purpose is not to stimulate manufacturing. The entire purpose is to protect the profit margins of the retailers who buy from the same factories in China by stopping consumers from avoiding the middle man."

Limited Local Alternatives: Even with increased import costs, consumers often find limited local alternatives for specialized or affordable goods, forcing them to pay higher prices for the same items from European resellers. "So limiting China products sounds good in theory but not with this tax - it just hurts the consumer but not resellers who order in bulk, pose as EU company and still sell these items"