In Edinburgh airport, there is a shop like there is in many other airports which sells goods “tax free”. It’s a brilliant selling point – why give the tax man more than you have to?
In amongst all the luxury items – to me anyway – the perfumes, make up and hand bags … there is a small area where you can buy pens. The pens come in a variety of colours, styles and of course prices.
The other week, I realized that I had started my travels without a pen, so I decided to venture in. I picked up my usual brand of pen only to realize that it cost 75p. I asked the chap at the counter why it appeared to be a full 6p more expensive than if I was to buy it outside the airport.
“Why sir, this pen is 75p because it is tax-free. The pen that you buy outside the airport is taxed and therefore costs 69p.”
“No, surely you’ve got that the wrong way round” I protested in my least patronizing way possible.
“Well, you might think that but it’s true. This pen is tax free and is 75p – the nasty government tax the pens outside the airport and so they cost 69p. It’s all about economics.”
I was ready to miss my flight to hear the end of this one … “Go on” I said “I’m listening …”
“You see sir, there are more people outside the airport than are inside the airport, so the shops outside leverage what they call “purchasing power” meaning they get a big discount on their pens. The government taxes that discount meaning you don’t get the full discount – you have to pay 69p for your pen. We don’t pay tax – because we’re a “tax-free” shop so with us, you pay 75p. QED.”
“And the shops outside the airport keep some of their discount?” I asked.
“Oh no, they pass it all on to you the customer …” he said.
“So tell me professor, why don’t I wait til I land in London and buy my pen outside the airport for 69p?”
Adopting an even more patronizing look than I originally had he replied “because you don’t pay tax in here … duh!”
“And so the pens are exactly the same?” I challenged.
“Well, yes … although because the other pens cost 69p, they actually last longer …”