The British pound is currently almost twice as much as the US dollar. Given this I am puzzled to see that prices of general retails items in UK are almost twice as expensive as in the US.
A pair of say GAP jeans will cost 40 pounds in UK and about 40 dollars in the US. One would expect that in UK it would cost about 20 pounds.
Why such a difference? Is the cost of doing business in UK really so high that by the time the goods reach retail stores in UK their prices are stupendously high? Is there an arbitrage opportunity there?
2007-08-14 12:32:03 · 3 answers · asked by lgupta1 1 in Business & Finance ➔ Other - Business & Finance
The european has a VAT (value added tax) that is sort of like a super sales tax. They tax every time value is added to an item. When the cootton is made into thread it is more valuable so tax is added. By the time you get to a completed pair of jeans they've been taxed 100 times over. Some congressmen in the US are pushing for that type of tax here. Pray they don't get it through or those jeans will cost the same here as in the UK. I know people in France who take their vacations to the US just to shop. The savings on prices pays for their vacation and then some.
2007-08-14 12:45:13 · answer #1 · answered by mustanger 7 · 0⤊ 0⤋
Its called exploitation or foreign trade agreements.
2007-08-14 12:40:41 · answer #2 · answered by Karl L 3 · 0⤊ 0⤋
you want US goods - you have to ship them from US - costs money, plus import tarriffs, VAT, etc
2007-08-14 13:46:12 · answer #3 · answered by Anonymous · 0⤊ 0⤋