A court ruling has stated that in future charity shops in Sweden must charge value added tax (MOMS at 25%) on all the goods they sell. In Britain, charity shops enjoy valuable property tax concessions with the result that in some shopping streets, there is almost nothing apart from charity shops.
The case was brought by the tax authorities, using the argument is that it gives them an unfair trading advantage. These charity shops in Sweden already enjoy the services of a free workforce provided under a system of workfare. Now they claim there will be a wave of closures as a result of the ruling.
This looks like a bad move; by any standards, MOMS is a disastrous tax. But look again. The tax privileges enjoyed by these charities has made it almost impossible to earn a livelihood selling second-hand clothes, books, household goods and furniture, a once-flourishing business sector dealing in items that were not of sufficient quality or age to be considered as antiques.
The tax is not going to be passed on because there is a ceiling to what people will pay for second-hand goods, so the charity shops will have to absorb it. This change should also give small businesses a chance to get going once again in a trade from which the charity shops have squeezed them out.
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