Don't Go to Brazil for a Deal on an iPad - 60% tax on imported goods

[The Straight Story]

Don't Go to Brazil for a Deal on an iPad
The $985 cost of an iPad in Brazil provides a strong example of how high tariffs and protectionist policies hurt the nation's consumers
By Lucia Kassai and Cecilia Tornaghi

On the night of Dec. 2, almost 500 gadget-crazy Brazilians in São Paulo lined up outside electronics retailer FNAC's big store in Morumbi Shopping complex south of the city. They waited until midnight to buy the Apple (AAPL) iPad, which finally went on sale in Brazil months after its international launch. First in line was Joao Teofilo Ribeiro, who was so excited he brought his entire family to wait with him.

They weren't looking for a bargain. The iPad lists at FNAC and other Brazilian stores for $985, almost twice as much as in the U.S. and one of the highest official prices for an iPad anywhere, according to Macworld Brazil, a Brazilian newsletter run by U.S.-based International Data Group.

The iPad is one example of the many price distortions caused by Brazil's elaborate industrial policy. Companies that don't manufacture goods in Brazil have to pay stiff tariffs if they want to sell to the nation's consumers. Brazil levies a 60 percent tax on the iPad and as much as 90 percent on imported cars. A blouse that retails for $49.50 at The Gap in the U.S. goes for $82 in Brazil at non-Gap outlets. "Brazilians sometimes pay luxury-good prices for second-rate items," says tax specialist André Mendes Moreira, who writes a widely read financial column and tracks the impact of import taxes on everything from cars to champagne. "The consumer is at a clear disadvantage."

Brazil imposes these stiff taxes on imports to promote local industry and encourage foreign manufacturers to set up factories inside the country. Samsung Electronics, for example, has been manufacturing locally since 1986. It now makes the Galaxy Tab, its answer to the iPad, at one of its Brazilian plants. In contrast to Samsung, Apple is a holdout. In March, Brazilian media reported that Chief Executive Officer Steve Jobs was asked by the city of Rio de Janeiro to set up the country's first Apple Store in time for the 2020 Olympics. Jobs refused, citing the superhigh taxation of important electronics.

http://www.businessweek.com/magazine/content/10_51/b4208013564850.htm

[Confusious]

1. That's what we should do.

That's what we did during the start of this country. tariffs, tariffs and more tariffs.

[Motown_Johnny]

4. +1

[hobbit709]

2. I wonder how many of the Brazilians living in the slums have one.

Conspicuous consumption by the wealthy.

[safeinOhio]

3. On the other hand,

Unemployment is about 3% less than ours and growth is about 10% compared to our 2%. They have been so over loaded with foreign investments that they are now taxing it to slow it down.

A middle ground might make sense.

[marmar]

5. "The consumer is at a clear disadvantage." ............

...... the writer said, with the sound of free-market drums being pounded as a backdrop. :eyes:

Brazil "gets it": Protect your markets or lose your sovereignty to global capitalist gangsters.

[Warren Stupidity]

6. "Companies that don't manufacture goods in Brazil have to pay stiff tariffs"

Oh the horrors of protecting your own industries. Gadget Geeks have to pay extra for an Ipad? Say it ain't so! I guess Samsung sees an opportunity to employ Brazilians and eat Apple's lunch.