Let’s take into account US State Sales taxes and see if it makes much difference
In the past we’ve compared the US retail price of Microsoft Office with the Australian price with GST. That was a fair comparison since many people could avoid US state sales taxes by buying online with free shipping in many cases.
But in the last few years things have changed in the USA. Microsoft has long argued that global price comparisons don’t account for US taxes but until relatively recently it was simple for people to bypass that extra cost. Online retailers like Amazon and Microsoft now have started charging state sales tax according to the delivery address or, when there’s no physical delivery, the credit card billing address. The current arrangements depend on the state and product however the overall trend it towards online retailers charging state, but not local, taxes. Office 365 subscribers in the USA pay state sales tax according to the billing address of the credit card used to pay.
In light of that trend, we’ve changed the way we compare Microsoft Office prices around the world. Since most US customers can pay state sales tax for Microsoft Office, we’ll include a range of price difference instead of a single percentage point. We feel this is a fairer comparison.
Below is a revised calculation for the Australian prices for Office 2013 vs the same products in the USA. It shows a range of differences from zero US sales tax up to 7.5% which is currently the highest state tax (California).
As you can see, a Home Premium subscription is in the range 3 to 11% more in Australia – depending on the US state sales tax. The worst case is 30 to 40% for Office 2013 Professional.
The result is, unsurprisingly, that the US-Aussie price difference isn’t as great when US taxes are considered however there’s still a hefty extra markup for the more expensive and specialized products.
The calculation is designed to allow for exchange rate variations, Australian taxes and US state sales taxes. If anything, the calculation is generous to Microsoft.
Australian and US retail prices from Microsoft see our original calculation for more details.
Interbank Exchange Rate at 13 Feb 2013: 0.97399 plus 2% to simulate higher credit card xrate charged to consumers
Australian Goods and Services Tax (GST): 10%
The calculations apply the range of US state sales taxes, which Microsoft collects even for online / download orders. These taxes vary from zero (AL, OR, MO, NH and DE) to 7.5% in California.
The calculations does NOT allow US local sales taxes which are not charged by online retailers and therefore easily avoided for software products, especially downloads.
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