Anybody else noticing the prices creeping up?

ToneControl

crunchman said:

I imagine that any trade deal would mean that the £390 limit on the value of a guitar that you can personally bring back from the US would be gotten rid of, and you probably wouldn't have to pay VAT when you bring it back through customs either.  If you buy in the US then you might have to pay a local state sales tax, but most of those are a lot less than the 20% VAT we have.

If you went to Chuck Levins for instance, Maryland Sales tax is 6%.  A McCarty 594 with a 10 top is listed at $4,200.  It's listed at £3879 at Andertons.  The exchange rate at the moment is 1.24.9 on the BBC website.  Even if you can only get a rate of 1.20 it works out at £3710 when you add 6% sales tax - a saving of £179.  If you can get $1.22 to the pound it's £3649 - a saving of £230.  If there was no VAT to pay when you came back then if you want to buy that guitar then it would make sense to combine the purchase with a trip to Washington and see the Smithsonian etc.  If you could find a dealer in one of the states with no sales tax then the savings would be even bigger.

PRS seem to have a bigger price differential than some other brands.  Doing the sums someone like Fender actually seem reasonably well priced here.

Where there probably would be savings would be on pedals.  An OCD in the UK seems to retail at £132 at the moment.  In the US it seems to be $118.  By the time you pay shipping, duty and VAT it's not worth importing one at the moment but that would be very different if the VAT and duty was no longer there.

also add the immoral £12 HMRC handling charge

UnclePsychosis

ToneControl said:

crunchman said:

also add the immoral £12 HMRC handling charge

Not this nonsense again.

guitars4you

crunchman said:

I imagine that any trade deal would mean that the £390 limit on the value of a guitar that you can personally bring back from the US would be gotten rid of, and you probably wouldn't have to pay VAT when you bring it back through customs either.  If you buy in the US then you might have to pay a local state sales tax, but most of those are a lot less than the 20% VAT we have.

If you went to Chuck Levins for instance, Maryland Sales tax is 6%.  A McCarty 594 with a 10 top is listed at $4,200.  It's listed at £3879 at Andertons.  The exchange rate at the moment is 1.24.9 on the BBC website.  Even if you can only get a rate of 1.20 it works out at £3710 when you add 6% sales tax - a saving of £179.  If you can get $1.22 to the pound it's £3649 - a saving of £230.  If there was no VAT to pay when you came back then if you want to buy that guitar then it would make sense to combine the purchase with a trip to Washington and see the Smithsonian etc.  If you could find a dealer in one of the states with no sales tax then the savings would be even bigger.

PRS seem to have a bigger price differential than some other brands.  Doing the sums someone like Fender actually seem reasonably well priced here.

Where there probably would be savings would be on pedals.  An OCD in the UK seems to retail at £132 at the moment.  In the US it seems to be $118.  By the time you pay shipping, duty and VAT it's not worth importing one at the moment but that would be very different if the VAT and duty was no longer there.

If you can walk it through customs and not declare it then all well and good - but officially you can't avoid the vat - if you had it sent via UPS etc, then they become the collector of appropriate government fees, in this case around 4-5% import duty and 20%  vat - You can't really avoid the vat - as far as import duty goes, then any pending UK and USA deal might reduce or end any additional import tax/tariff - but only 'smuggling' will remove that 20% vat

A bit unfair in many ways that in the USA that dealers can list prices on their web site that show no local taxes - this is not payable on a mail order transaction to the UK, but if you are there in person it is payable - Whereas we have to show the actual price you pay, including all fees - Also remember now, that officially USA dealers are not allowed to send new goods out of the USA to other countries as part of their dealership agreements - And if they did it does not mean the UK will accept any responsibility for warranty repairs, if required - Furthermore if you paid for it on a UK credit card, then chances are you would not get such a good exchange rate and also a handling fee is generally payable around 1-2% for conversion of funds - banks want their 10 penneth

In short, over 20% of the cost of a new guitar in the UK goes to Mrs May and our beloved leaders - So on a £2000 they will get around £400 for doing nothing, which may well be more than the dealer makes

streethawk

guitars4you said:

crunchman said:

I imagine that any trade deal would mean that the £390 limit on the value of a guitar that you can personally bring back from the US would be gotten rid of, and you probably wouldn't have to pay VAT when you bring it back through customs either.  If you buy in the US then you might have to pay a local state sales tax, but most of those are a lot less than the 20% VAT we have.

If you went to Chuck Levins for instance, Maryland Sales tax is 6%.  A McCarty 594 with a 10 top is listed at $4,200.  It's listed at £3879 at Andertons.  The exchange rate at the moment is 1.24.9 on the BBC website.  Even if you can only get a rate of 1.20 it works out at £3710 when you add 6% sales tax - a saving of £179.  If you can get $1.22 to the pound it's £3649 - a saving of £230.  If there was no VAT to pay when you came back then if you want to buy that guitar then it would make sense to combine the purchase with a trip to Washington and see the Smithsonian etc.  If you could find a dealer in one of the states with no sales tax then the savings would be even bigger.

PRS seem to have a bigger price differential than some other brands.  Doing the sums someone like Fender actually seem reasonably well priced here.

Where there probably would be savings would be on pedals.  An OCD in the UK seems to retail at £132 at the moment.  In the US it seems to be $118.  By the time you pay shipping, duty and VAT it's not worth importing one at the moment but that would be very different if the VAT and duty was no longer there.

If you can walk it through customs and not declare it then all well and good - but officially you can't avoid the vat - if you had it sent via UPS etc, then they become the collector of appropriate government fees, in this case around 4-5% import duty and 20%  vat - You can't really avoid the vat - as far as import duty goes, then any pending UK and USA deal might reduce or end any additional import tax/tariff - but only 'smuggling' will remove that 20% vat

A bit unfair in many ways that in the USA that dealers can list prices on their web site that show no local taxes - this is not payable on a mail order transaction to the UK, but if you are there in person it is payable - Whereas we have to show the actual price you pay, including all fees - Also remember now, that officially USA dealers are not allowed to send new goods out of the USA to other countries as part of their dealership agreements - And if they did it does not mean the UK will accept any responsibility for warranty repairs, if required - Furthermore if you paid for it on a UK credit card, then chances are you would not get such a good exchange rate and also a handling fee is generally payable around 1-2% for conversion of funds - banks want their 10 penneth

In short, over 20% of the cost of a new guitar in the UK goes to Mrs May and our beloved leaders - So on a £2000 they will get around £400 for doing nothing, which may well be more than the dealer makes

To be fair, if the 20% was removed then UK dealers would have to drop their prices to avoid losing business to American dealers. But then everyone in Europe would be tempted to buy from the UK instead of their own dealers, which would surely cause a stink with the manufacturer.

Also the treasury spends the revenue on public services, or at least should do (a whole other argument). 

Or am I reading this wrong?

guitars4you

streethawk said:

To be fair, if the 20% was removed then UK dealers would have to drop their prices to avoid losing business to American dealers. But then everyone in Europe would be tempted to buy from the UK instead of their own dealers, which would surely cause a stink with the manufacturer.

Also the treasury spends the revenue on public services, or at least should do (a whole other argument). 

Or am I reading this wrong?

If any dealer sells a new guitar for £2400 - in actual fact the dealer is only charging £2000 - The government charges you an additional £400 VAT, making a total price of £2400 and as such the dealer is employed (free of charge I might add) to be the collector of HM Taxes - The VAT will not be removed by any trade agreement with the USA, or EU - Yes we have had changes in vat since it was introduced early in the 1970's, but the vat is nothing to do with any trade agreement between 2 countries

The level of tax (import duty), which is now hidden in the price, can be discussed on a new potential trade agreement between the UK and the USA (it appears as though we can only discuss such a potential deal once we have left the EU)  - You and I may well see vat and import duty as an additional fee that goes towards our government, which indeed it is - To a degree they are different, but they amount to the same thing, in that additional fees go to the government  

So in short, import tax, around 4/5% is payable on the import cost  of the guitar, to now establish a cost price to the dealer - the dealer now adds his margin to establish a selling price - the dealer is now told to add 20% vat which becomes your final price

Effectively the only difference in the trade price I pay Fender for a USA Guitars, compared to a USA dealer, is the import tax and a small admin fee for carriage - The dealers profit margin in the USA or the UK will be similar - Allow additional cost of shipping/carriage - So many brands that are now shipped direct to the UK (Fender, Gibson, PRS etc who have EU/UK operations with no 3rd party  or middleman involved) the main difference in price between the USA and UK is what the government charge via import tax and vat

Hope that makes sense

crunchman

If there is a trade deal with the US that may change though.  I can go to Germany and by a guitar there and pay German VAT and I don't have to pay UK VAT when I re-enter the UK.  A trade deal with the US might mean that I can go there and pay US sales tax of 6% (or 0% in a handful of states) and legally not have to pay the VAT when I come back.

If nothing else you would expect prices to drop by the 4 or 5% that is import duty.

guitars4you

crunchman said:

If there is a trade deal with the US that may change though.  I can go to Germany and by a guitar there and pay German VAT and I don't have to pay UK VAT when I re-enter the UK.  A trade deal with the US might mean that I can go there and pay US sales tax of 6% (or 0% in a handful of states) and legally not have to pay the VAT when I come back.

If nothing else you would expect prices to drop by the 4 or 5% that is import duty.

true - within the EU vat is paid at the point of sale - be it you there in person, or mail order say via Thomann - no additional vat or tax to pay

however the 4/5% import duty won't be removed from the actual selling price - It will only be removed from the actual cost price at the price it is imported into the EU/UK accordingly - so for easy figures at this stage 

If a guitar is imported into the EU/UK at £1000 and now 4% import duty is applied - the guitar now costs £1040 - say the dealer adds 35% - the guitar is now £1404 - now add vat and the guitar is finally sold at £1684

same example but no 4% import duty - £1000 + 35% dealer ='s £1350 - add 20% vat and the guitar is finally sold for £1620 

so yes a saving of £64 - represents around 3.9% - actually when I did this example I suppose the 4% or 3.9% is fairly negligible as a % - but it is nevertheless a £64 saving - so effectively double that on a guitar around £3200 - and 1/2 that on a guitar around £840 - Granted the saving is better in your pocket as against Mrs May's pocket

guitars4you

remember at the moment vat is around 20% in most of Europe - who knows, but without EU costs, vat MIGHT (Only MIGHT) be lowered in the UK - don't count on it though

streethawk

Reading up on the history of VAT (or purchase tax as it used to be know), it was historically high until we joined the EEC. Since then, it's the Conservatives who have tended to raise it, which is surprising considering they are thought of as the low tax party.

 If you see VAT as a progressive measure to swell treasury revenues from the sale of non essential items, that's a potentially good thing. If you see it as a regressive tax because the less well off tend to spend more on consumer items as a percentage of their wealth, it's a potentially bad thing.

Confusing stuff.

I'm still not sure whether Fender and co would allow UK dealers to sell at a 20% reduced rrp if EU states had to keep to their VAT prices.

guitars4you

streethawk said:

Reading up on the history of VAT (or purchase tax as it used to be know), it was historically high until we joined the EEC. Since then, it's the Conservatives who have tended to raise it, which is surprising considering they are thought of as the low tax party.

 If you see VAT as a progressive measure to swell treasury revenues from the sale of non essential items, that's a potentially good thing. If you see it as a regressive tax because the less well off tend to spend more on consumer items as a percentage of their wealth, it's a potentially bad thing.

Confusing stuff.

I'm still not sure whether Fender and co would allow UK dealers to sell at a 20% reduced rrp if EU states had to keep to their VAT prices.

we are going slightly off topic here - but in many ways vat is an additional tax on the balance of your wage that has already had NI and income tax removed from it - I think stats indicate that with either direct or indirect taxation it is around 6 months of the year before any income is yours - there are exact figures somewhere but I can't be bothered to hunt - some will remember Michael Heseltine and the ill fated poll tax - at the time vat was 15% - Tories dropped the poll tax and increased vat to 17.5% to compensate and I believe/recall it was meant to be a temporary measure

ref your final sentence - I'm still not sure whether Fender and co would allow UK dealers to sell at a 20% reduced rrp if EU states had to keep to their VAT prices - rest assured no government will be removing vat - adjusting it maybe but not removing it - don't blame me for that additional tax/vat, but like it or lump it, get use to it

streethawk

guitars4you said:

streethawk said:

Reading up on the history of VAT (or purchase tax as it used to be know), it was historically high until we joined the EEC. Since then, it's the Conservatives who have tended to raise it, which is surprising considering they are thought of as the low tax party.

 If you see VAT as a progressive measure to swell treasury revenues from the sale of non essential items, that's a potentially good thing. If you see it as a regressive tax because the less well off tend to spend more on consumer items as a percentage of their wealth, it's a potentially bad thing.

Confusing stuff.

I'm still not sure whether Fender and co would allow UK dealers to sell at a 20% reduced rrp if EU states had to keep to their VAT prices.

we are going slightly off topic here - but in many ways vat is an additional tax on the balance of your wage that has already had NI and income tax removed from it - I think stats indicate that with either direct or indirect taxation it is around 6 months of the year before any income is yours - there are exact figures somewhere but I can't be bothered to hunt - some will remember Michael Heseltine and the ill fated poll tax - at the time vat was 15% - Tories dropped the poll tax and increased vat to 17.5% to compensate and I believe/recall it was meant to be a temporary measure

ref your final sentence - I'm still not sure whether Fender and co would allow UK dealers to sell at a 20% reduced rrp if EU states had to keep to their VAT prices - rest assured no government will be removing vat - adjusting it maybe but not removing it - don't blame me for that additional tax/vat, but like it or lump it, get use to it

What I'm saying is that even if VAT was scrapped in the UK, imported guitars wouldn't drop in price by 20%. Fender and Gibson wouldn't allow it while EU dealers still had to pay VAT on their stock. Right? I'm not sure the same measure would be applied if the EU scrapped VAT (which obviously it wouldn't) because it's a bigger trading block than GB. We'd all be buying our cheap fenders from France!

In fact now I come to think of it, any sweetheart deal on customs duty from the States might lead the EU to consider protectionist measures on all US sourced GB exports (to the EU). But that's going off topic.

guitars4you

streethawk said:

guitars4you said:

streethawk said:

Reading up on the history of VAT (or purchase tax as it used to be know), it was historically high until we joined the EEC. Since then, it's the Conservatives who have tended to raise it, which is surprising considering they are thought of as the low tax party.

 If you see VAT as a progressive measure to swell treasury revenues from the sale of non essential items, that's a potentially good thing. If you see it as a regressive tax because the less well off tend to spend more on consumer items as a percentage of their wealth, it's a potentially bad thing.

Confusing stuff.

I'm still not sure whether Fender and co would allow UK dealers to sell at a 20% reduced rrp if EU states had to keep to their VAT prices.

we are going slightly off topic here - but in many ways vat is an additional tax on the balance of your wage that has already had NI and income tax removed from it - I think stats indicate that with either direct or indirect taxation it is around 6 months of the year before any income is yours - there are exact figures somewhere but I can't be bothered to hunt - some will remember Michael Heseltine and the ill fated poll tax - at the time vat was 15% - Tories dropped the poll tax and increased vat to 17.5% to compensate and I believe/recall it was meant to be a temporary measure

ref your final sentence - I'm still not sure whether Fender and co would allow UK dealers to sell at a 20% reduced rrp if EU states had to keep to their VAT prices - rest assured no government will be removing vat - adjusting it maybe but not removing it - don't blame me for that additional tax/vat, but like it or lump it, get use to it

What I'm saying is that even if VAT was scrapped in the UK, imported guitars wouldn't drop in price by 20%. Fender and Gibson wouldn't allow it while EU dealers still had to pay VAT on their stock. Right? I'm not sure the same measure would be applied if the EU scrapped VAT (which obviously it wouldn't) because it's a bigger trading block than GB. We'd all be buying our cheap fenders from France!

In fact now I come to think of it, any sweetheart deal on customs duty from the States might lead the EU to consider protectionist measures on all US sourced GB exports (to the EU). But that's going off topic.

valid point - in that dealers like Thomann are moaning now to suppliers that with the current exchange rate certain prices are cheaper here in the UK than they are on main land Europe - just how the cookie crumbles sometimes

Dave_Mc

darthed1981 said:

ToneControl said:

I'd suggest the drop since Brexit (to where we are now) was likely coming anyway - Brexit or not

(a) There is also the possibility that staying in the EU would have provided a boost, and certainly had the referendum gone the other way it could easily have killed the rise of the populist right in the west, which is terrifying enough even economists have probably noticed.

(b) Back more OT, the problem is not so much the price goes up when the pound gets weaker, it is that the prices never go back down.  The prices of a professional strat and LP Standard respectively are now hovering around 1399 and 1899 respectively, a good couple of hundred quid more than two years ago.

(a) You may be right, though I would say that there are/were plenty of left-wing reasons to be anti-EU as well- just the populist right kind of shouted more loudly...

(b) Agreed. When the exchange rate was very good (just before the massive crash of 2007/8), while prices were admittedly a lot better than they are now, the reason given why the prices weren't even better and more of a direct conversion to, say, USA pricing, was often, "We have to hedge in case the exchange rate gets less favourable."

Yet when the exchange rate actually gets less favourable, prices rise.

streethawk said:

Reading up on the history of VAT (or purchase tax as it used to be know), it was historically high until we joined the EEC. Since then, it's the Conservatives who have tended to raise it, which is surprising considering they are thought of as the low tax party.

 If you see VAT as a progressive measure to swell treasury revenues from the sale of non essential items, that's a potentially good thing. If you see it as a regressive tax because the less well off tend to spend more on consumer items as a percentage of their wealth, it's a potentially bad thing.

Confusing stuff.

Well if the Tories tend to raise VAT, that should probably answer your question there...

streethawk

Dave_Mc said:

darthed1981 said:

ToneControl said:

I'd suggest the drop since Brexit (to where we are now) was likely coming anyway - Brexit or not

(a) There is also the possibility that staying in the EU would have provided a boost, and certainly had the referendum gone the other way it could easily have killed the rise of the populist right in the west, which is terrifying enough even economists have probably noticed.

(b) Back more OT, the problem is not so much the price goes up when the pound gets weaker, it is that the prices never go back down.  The prices of a professional strat and LP Standard respectively are now hovering around 1399 and 1899 respectively, a good couple of hundred quid more than two years ago.

(a) You may be right, though I would say that there are/were plenty of left-wing reasons to be anti-EU as well- just the populist right kind of shouted more loudly...

(b) Agreed. When the exchange rate was very good (just before the massive crash of 2007/8), while prices were admittedly a lot better than they are now, the reason given why the prices weren't even better and more of a direct conversion to, say, USA pricing, was often, "We have to hedge in case the exchange rate gets less favourable."

Yet when the exchange rate actually gets less favourable, prices rise.

streethawk said:

Reading up on the history of VAT (or purchase tax as it used to be know), it was historically high until we joined the EEC. Since then, it's the Conservatives who have tended to raise it, which is surprising considering they are thought of as the low tax party.

 If you see VAT as a progressive measure to swell treasury revenues from the sale of non essential items, that's a potentially good thing. If you see it as a regressive tax because the less well off tend to spend more on consumer items as a percentage of their wealth, it's a potentially bad thing.

Confusing stuff.

Well if the Tories tend to raise VAT, that should probably answer your question there...

I'm trying to remain objective. 

Dave_Mc

Hahahahahahahaha

I opted for having just enough ambiguity in my reply. I think.

NelsonP

Here's a review of the laney irt x from May 2015. Price is quoted as 'under £300'.
Cheapest price I can find today is £365!

http://www.soundonsound.com/reviews/laney-irt-x

Niallseroreilly

With PRS i think the reason their prices rise drastically every year is because people will buy them it seems at whatever price.. especially on finance

Since the internet has taken over the guitar game, us idiots drool over their silly tops and lust after buying one.... PRS is ahead of the game on the looks imo

The marketing bloodsuckers know this...

I have a PRS DGT, its nice but now theyre at over 3 grand... come on

stickyfiddle

While @ToneControl 's EUR/GBP rates are correct, I don't think they're very relevant, both due to the known volatility of the Euro in the last decade, and because most guitar gear comes from Asia or the US (Duesenberg is the only major EU-based manufacturer I can think of, and most of their stuff is made in Korea to some extent). 

http://www.xe.com/currencycharts/?from=GBP&to=eur&view=10Y

In contrast, the pound has had a fairly consistent decline on the dollar since 2006 when it was 2:1. The drop-off in 2008 was far worse but noone was whining then, perhaps because it wasn't self-inflicted that time around.

http://www.xe.com/currencycharts/?from=GBP&to=usd&view=10Y

It's arguably gone a little too far now and will come back to 1.40 or so, but that will probably take a few years. Either way, the fact that GBP prices have remained relatively low until now is actually quite impressive.

In 2006 an SG Standard was about GBP 900, now they're 1100, which is a smaller change than the currency movement should have caused overall. Sure, an LP Standard is double what it was then, but with Amazon's regular blowouts surely noone is buying them at RRP?

Gassage

I blame the Quitters.

Thing is, it was all so predicatable - I take no pleasure whatsover in saying I told you Quitters so.

ToneControl

stickyfiddle said:

While @ToneControl 's EUR/GBP rates are correct, I don't think they're very relevant, both due to the known volatility of the Euro in the last decade, and because most guitar gear comes from Asia or the US (Duesenberg is the only major EU-based manufacturer I can think of, and most of their stuff is made in Korea to some extent). 

http://www.xe.com/currencycharts/?from=GBP&to=eur&view=10Y

In contrast, the pound has had a fairly consistent decline on the dollar since 2006 when it was 2:1. The drop-off in 2008 was far worse but noone was whining then, perhaps because it wasn't self-inflicted that time around.

http://www.xe.com/currencycharts/?from=GBP&to=usd&view=10Y

It's arguably gone a little too far now and will come back to 1.40 or so, but that will probably take a few years. Either way, the fact that GBP prices have remained relatively low until now is actually quite impressive.

In 2006 an SG Standard was about GBP 900, now they're 1100, which is a smaller change than the currency movement should have caused overall. Sure, an LP Standard is double what it was then, but with Amazon's regular blowouts surely noone is buying them at RRP?

I've shown the £ against the Euro, but the principle is the same obviously, the £ and Euro cannot vary independently against the dollar. I'm just trying to show the same thing you've mentioned: long term cycles. I don't think there is evidence to indicate that more than a small part of the current drop is caused by Brexit - we were on a decline already