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Euro Apple fans moan over Mac Mini pricing

It's the sales tax, stupid

Opinion European Mac users are petitioning Apple to eliminate what they claim is its "rip-off" Mac Mini pricing.

"We'd like to make an appeal to Apple on the pricing of the new Mac mini in the European Union," the online petition states. "Basing [sic] on the last long-term rate of exchange of US dollars to euros (and vice versa) - which is 1.3293 on the spot market, so let's say 1.32 - both announced prices of the Mac mini in Europe, €489 and €589, respectively, are much too high."

Whingeing British Mac fans were quick to pitch in by pointing out that the cheaper of the two Mac Mini configurations costs $499 in the US - around £267 at current exchange rates. However, UK buyers pay £339.

Of course, petitioners forget that the UK price contains sales tax, charged at a rate of 17.5 per cent, whereas the US price does not. So the comparable UK price would be £289. Still £22 more than the dollar-sterling exchange price, but a darn sight smaller differential than the moaners would have you believe. Different import duties apply too, which may also yield a higher UK price than the dollar-sterling translation would suggest.

Continental Europeans are a little more justified in their complaints - but not much. The $499 Mac Mini costs €422 in Germany, once sales tax has be deducted, compared to a dollar-to-euro price of €384. Again, import duties and other taxes may widen the differential. French buyers pay €418; Italians €416; and Spaniards €422.

Today, the dollar is very low. That may change. If the currency strengthens, the disparity could disappear very quickly. Indeed, Apple could start losing money from Europeans, unless it adjusted its prices.

The bottom line, then, is that the petitioners might be better off complaining to their respective governments at the high sales taxes and duties imposed upon these and other products.

Yes, Apple may charge Europeans more than its US customers, once sales taxes and import duties have been taken into account. Like all IT companies - and, for that matter, all businesses - Apple charges what it thinks punters in each territory will pay. But be glad that the old days when the company - and, again, it was by no means the only IT firm to do this - would effectively set European pricing by simply cutting the dollar sign off the US price and pasting on a sterling symbol instead.

Apple does have a case to answer when it comes to preventing cross-border trade among its various European iTunes Music Stores, and indeed the European Commission has been asked to investigate this potential violation of the Treaty of Rome.

No one is being forced by buy a Mac - or a PC, for that matter. We have a choice, ladies and gentlemen. And we can buy from US suppliers.

Maybe not. More pernicious is the emergence of increasing numbers of region-specific hardware, designed to prevent cross-border purchasing. According to a recent Wall Street Journal article Apple is building US iMac G5s with a US-only power transformer - connect it up to the higher-voltage UK mains and you'll blow it. Time was when all Macs shipped with auto-switching transformers.

The WSJ cites numerous other examples of vendors designing systems so that, say, European toner cartridges will not work with US-sourced laser printers. Again, Apple is not acting alone.

Let's ensure that before complaining about Apple's hardware pricing policy, we understand just how much of those prices goes not into the company's coffers, how much is taken by the banks in currency exchange transactions, and how much is taken by governments. ®

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