F-X deal is back on. Brazil back in action

[Aussie Digger]

Fact is the The Link-16/Link-22 does not have all the capabilities of the TIDLS.

Really? Name one capability TIDLS provides that MIDS-LVT running the Link 16 waveform doesn't.

I can name one capability that MIDS-LVT/L-16 has that TIDLS doesn't currently have though.

A reliable and secure encryption system...

Sweden's air force 'can't send secret messages' - The Local

Fact is the SH did not become the improvement of the F/A-18 it was meant to be, the toe out of the weapon pylons is real and that did affect the performance of the aircraft.

Rubbish. The Block II Super Hornet is significantly more capable in every area that actually matters than legacy Hornet aircraft.

On page 11 of the below document is how the US Navy AND the US Government Audit Office (GAO) rate the US Navy's past, current and future aircraft capability wise (in comparison to the F-35 Joint Strike Fighter).

http://www.gao.gov/new.items/d04900.pdf

As to the "toe out" argument, yes the pylons are canted about 4 degrees outwards, in order to improve stores separation from the aircraft. This increases drag a fraction and has meant that the E/F Super Hornet has slightly reduced speed and acceleration as compared to the legacy Hornet in some flight regimes, however it meets the requirements the USN had for it. But they do a better job of rebutting these useless criticisms than I can:

Navy: Super Hornet rep for problems untrue - MarineCorpsTimes.com

Fact is the SH is heavier than for example the Rafale (4 tons is a lot) but the payload is not as impressive as the payload of the Rafale.

Payloads, eh? Shall we look at the figures then?

Super Hornet - 17750lbs of external stores.

Super Hornet internal fuel - 14368lbs of fuel.

Total payload: 32118lbs maximum of internal fuel and external stores.

Federation of American Scientists :: F/A-18 Hornet

Rafale - 20,950 lb of external stores.

Rafale internal fuel - 10,300 lbs of fuel.

Total payload: 31250lbs maximum of internal fuel and external stores.

Aircraft Characteristics

Payloads, ranges and basic airframe performance figures are very evenly matched for these two aircraft.

Whatever happens in this contest, it ISN'T going to be dependent on such...

 

[OPSSG]

Fact is the SH did not become the improvement of the F/A-18 it was meant to be, the toe out of the weapon pylons is real and that did affect the performance of the aircraft.

Rubbish. The Block II Super Hornet is significantly more capable in every area that actually matters than legacy Hornet aircraft.

On page 11 of the below document is how the US Navy AND the US Government Audit Office (GAO) rate the US Navy's past, current and future aircraft capability wise (in comparison to the F-35 Joint Strike Fighter).

http://www.gao.gov/new.items/d04900.pdf

As to the "toe out" argument, yes the pylons are canted about 4 degrees outwards, in order to improve stores separation from the aircraft. This increases drag a fraction and has meant that the E/F Super Hornet has slightly reduced speed and acceleration as compared to the legacy Hornet in some flight regimes, however it meets the requirements the USN had for it. But they do a better job of rebutting these useless criticisms than I can:

Navy: Super Hornet rep for problems untrue - MarineCorpsTimes.com

Thanks AD for the clarification on the Super Hornet pylons and stores, and in particular the great links. They are really helpful in showing up some of the dishonesty that has crept into the presentation of certain arguments in the blog-sphere.

Your clarification is much appreciated, as it helps me keep up to speed on the capabilities of the Super Hornet (which I have not been doing a good job at keeping up with).

 

[simdude97]

Sim

If you take VAT out of the equation you end with some very similar numbers to Swerve.
VAT is a tax, in this case the French State when buying from a French company pays VAT to that same company who afterwards pays the exact same amount to the... French state, and if i am not mistaken is around 19,5%.
VAT doesnt aply to exports, so...

Cheers

Interesting. I must admit I don't know much about VAT, but I guess that could explain the price decrease. Did I miss something in the document I referred too? I did not see anything about the VAT. Is there a document you could direct me to that explains how the VAT is accounted for by the French in their defense spending?

I wonder how much Boeing could shave off the 55 million fly away if all of the suppliers where exempt from the sales tax they charge Boeing for their components? I wonder how much more they would be able to drop the prices if the suppliers and Boeing where not subject to corporate income tax.

 

[Aussie Digger]

Thanks AD for the clarification on the Super Hornet pylons and stores, and in particular the great links. They are really helpful in showing up some of the dishonesty that has crept into the presentation of certain arguments in the blog-sphere.

Your clarification is much appreciated, as it helps me keep up to speed on the capabilities of the Super Hornet (which I have not been doing a good job at keeping up with).

No dramas. I'm interested in clearing up the ignorance that seems to abound about certain matters.

Anyone would think, if you were to believe these arguments that RAAF, USN, Brazil, India etc are all incompetent, if not down right stupid for considering or choosing to buy the Super Hornet.

Unfortunately they know the realities of the aircraft and the detractors don't, or wilfully ignore them...

So I do what I can...

 

[Bonza]

No dramas. I'm interested in clearing up the ignorance that seems to abound about certain matters.

Anyone would think, if you were to believe these arguments that RAAF, USN, Brazil, India etc are all incompetent, if not down right stupid for considering or choosing to buy the Super Hornet.

Unfortunately they know the realities of the aircraft and the detractors don't, or wilfully ignore them...

So I do what I can...

It's appreciated mate, these days there's so much total nonsense being thrown around re the Super Hornet, and all of it peddled like it's an 'inconvenient truth' the US/Boeing don't want people to know, rather than the speculation and mud-slinging it truly is.

The same pseudo-arguments get so tiring after a while that it's all I can do to avoid banging my head against the keyboard...

(No Andi, this isn't specifically referring to your posts, so don't get bent out of shape. This is more referring to the 'character assassination' the Super has received in Australia, due to certain self promoting loudmouths who think they know more than they do and a media largely incompetent when it comes to reporting on Defence matters).

 

[swerve]

I wonder how much Boeing could shave off the 55 million fly away if all of the suppliers where exempt from the sales tax they charge Boeing for their components? I wonder how much more they would be able to drop the prices if the suppliers and Boeing where not subject to corporate income tax.

Corporation tax is paid by Dassault and all other European firms. The price of an exported Rafale includes corporate income taxes paid by Dassault & its suppliers.

US sales taxes are only levied at the final point of sale, not on intermediate products, & not levied on exports. The price of an exported F-18E does not include any sales tax.

Your proposals would therefore not improve price comparisons.

 

[swerve]

Hello Swerve. This is direct from French budgetary documents which I included on one of my recent posts.

"Le coût total du programme pour l'Etat est de 39,6 milliards d'euros, (conditions financières au 1er janvier 2008) ce qui ramène le coût unitaire par avion (hors développement) entre 64 et 70 millions d'euros en fonction des versions, cette valeur devant toutefois augmenter du fait des négociations en cours avec l'industriel résultant de la réduction de la cible initiale."

Current French VAT rate is 19.6%. 64 mn divided by 1.196 = 53.5 mn. That's the price of the AdlA Rafales in the 2009 budget document you linked to. As I keep saying, very similar to the quoted export price, which is for land-based Rafales. The 70 mn Euros price you have quoted a few times is the more expensive naval version, including VAT. Without VAT that version is 58.5 mn.

Lastly, where did I say anything about subsidies?

Here -

...If I where a French tax payer I would be pretty angry that my government cannot afford an adequate number of planes for our air force yet we can subsidize Brazil's air force.

 

[simdude97]

Corporation tax is paid by Dassault and all other European firms. The price of an exported Rafale includes corporate income taxes paid by Dassault & its suppliers.

US sales taxes are only levied at the final point of sale, not on intermediate products, & not levied on exports. The price of an exported F-18E does not include any sales tax.

Your proposals would therefore not improve price comparisons.

Obviously I have something to learn about VAT, but I think your knowledge of how sales tax works in the US is somewhat lacking. Rates and what is taxable (food generally is not, and non profit entities generally are exempt) varies from state to state, but anytime a product or service is sold it is subject to sales tax. It most certainly is not levied only at the final point of sale.

While Brazil (or any other country) may not pay sales tax on an F-18, Boeing and GE pay sales tax on the components and services they buy in order to assemble the final product.

 

[simdude97]

Here -
Quote:
Originally Posted by simdude97 View Post
...If I where a French tax payer I would be pretty angry that my government cannot afford an adequate number of planes for our air force yet we can subsidize Brazil's air force.

Yes but you totally took it out of context. I was not saying one jet of the other was or was not subsidized. In fact I would argue that foreign sales subsidize the US taxpayer since they get to spread the R&D costs along with enjoying economies of scale due to a larger production run. You got my argument backwards Sport.

 

[Sintra]

Interesting. I must admit I don't know much about VAT, but I guess that could explain the price decrease. Did I miss something in the document I referred too? I did not see anything about the VAT. Is there a document you could direct me to that explains how the VAT is accounted for by the French in their defense spending?

I wonder how much Boeing could shave off the 55 million fly away if all of the suppliers where exempt from the sales tax they charge Boeing for their components? I wonder how much more they would be able to drop the prices if the suppliers and Boeing where not subject to corporate income tax.

Sim

You didnt miss anything in that document.
The "Projet de loi de finances pour 2009 : Défense - Equipement des forces" covers the acquisition programs for the French MOD, and by definition if the MOD buys something inside France, be that hardware, software, services, "whatever", it must pay VAT to the suplier, this applies not only to the state, but to any commercial act, If i go to the local pub and ask a "Rubi" (a very decent beer), part of the cost will be VAT, and that part of what i payed for my beer will revert to the state.
If you want a description of VAT in France there´s no better place than to look in here:
Questions réponses - Fiscalité - CEDEF

or a simpler version in here:
Taxe sur la valeur ajoutée - Wikipédia
Taxe sur la valeur ajoutée en France - Wikipédia

That´s a very basic description of VAT, the tricky part about this RAFALE Brasilian offer is that if Dassault sells the fighter to the FAB, the Brasilian MOD doesnt have to pay VAT, that means less 19,5% over the "Fly away cost" that Adla has payed for their jets.

But dont worry if this tax story seems a bit "Byzantine", it is...

Cheers

 

[swerve]

Obviously I have something to learn about VAT, but I think your knowledge of how sales tax works in the US is somewhat lacking. Rates and what is taxable (food generally is not, and non profit entities generally are exempt) varies from state to state, but anytime a product or service is sold it is subject to sales tax. It most certainly is not levied only at the final point of sale.

Then why do US online tax guides, & those state tax rules I have checked, all state that it is only levied at the final point of sale?

I know exactly how VAT works in the UK, because I had to find out when I ran my own small (too small to delegate everything) company, & I also know that it works almost exactly the same in every other EU country. I don't know what expertise you have in US sales taxes, but I do know that what you say contradicts published guides to how they work. Can you explain the discrepancy?

BTW, what you say implies that US sales taxes accumulate, tax on tax, as a product is sold. This would be an extremely powerful disincentive to buying in any component that could be made in-house, or outsourcing any component manufacturing which is already done in-house. It seems odd, therefore, that one of the main trends in US manufacturing in recent decades has been a move away from integrated firms doing as much as possible themselves, to increased dependence on networks of independent suppliers. Why would anyone do anything so fiscally suicidal, if what you say about sales taxes is true?

 

[Salty Dog]

Corporation tax is paid by Dassault and all other European firms. The price of an exported Rafale includes corporate income taxes paid by Dassault & its suppliers.

US sales taxes are only levied at the final point of sale, not on intermediate products, & not levied on exports. The price of an exported F-18E does not include any sales tax.

Your proposals would therefore not improve price comparisons.

There are no sales taxes for FMS since the US Government (the US. Navy in the case of the F-18) purchases the FMS "package" as the agent for the US Government. The MDE (major defense equipment) is then transferred from the US Government to the foreign government once the US Navy certifies the package.

 

[swerve]

There are no sales taxes for FMS since the US Government (the US. Navy in the case of the F-18) purchases the FMS "package" as the agent for the US Government. The MDE (major defense equipment) is then transferred from the US Government to the foreign government once the US Navy certifies the package.

Thank you.

In other words, the tax position is the same for US & French (& other EU) arms exports: corporate income taxes, payroll taxes etc. have been paid, but no VAT or sales taxes are included.

 

[Salty Dog]

Thank you.

In other words, the tax position is the same for US & French (& other EU) arms exports: corporate income taxes, payroll taxes etc. have been paid, but no VAT or sales taxes are included.

This is getting a bit confusing. The manufacturer has the burden of corporate taxes and payroll taxes. The purchaser has the burden of VAT or sales taxes. Are you referring to taxes at the point of sale, exporting country?. This is all transparent for USA FMS sales.

One item that has not come up is importation taxes at the point of delivery. In the case of Brazil, there are none if the government (FAB) is the purchaser.

 

[swerve]

This is getting a bit confusing.

Why? It seems clear. What I said is that the tax position is the same for aircraft exported from the USA and from EU countries. Surely that's clear.

The manufacturer has the burden of corporate taxes and payroll taxes. The purchaser has the burden of VAT or sales taxes. Are you referring to taxes at the point of sale, exporting country?. This is all transparent for USA FMS sales.

1) I know.
2) I know.
You need to read back, to see how & why discussion of taxes began. One poster was questioning the price at which Rafale is said to have been offered to Brazil, in the belief that it is much lower than the price paid by France. It was explained to him that the difference is mostly VAT, which is not charged on exports. He then (irrelevantly) speculated on what the export price of the F-18E would be if no sales taxes or corporation taxes were charged. I've been trying to clarify the situation. As far as I can see, it's now clarified.

 

[simdude97]

Why? It seems clear. What I said is that the tax position is the same for aircraft exported from the USA and from EU countries. Surely that's clear.



He then (irrelevantly) speculated on what the export price of the F-18E would be if no sales taxes or corporation taxes were charged. I've been trying to clarify the situation. As far as I can see, it's now clarified.

No it is not clarified. Rather than go back and forth with you I have just chosen to spend my time doing other things. Briefly, sales tax in the US is not a simple issue. It is levied to varying degrees and items at all points in the supply chain when goods or services are sold. The only two generalizations that you can make about US sales tax policy is that it is very fragmented and raw materials used in manufacture are generally not taxed.

In effect it is a very relevant speculation that has no simple, forum ready answer.

 

[Salty Dog]

Why? It seems clear. What I said is that the tax position is the same for aircraft exported from the USA and from EU countries. Surely that's clear.



1) I know.
2) I know.
You need to read back, to see how & why discussion of taxes began. One poster was questioning the price at which Rafale is said to have been offered to Brazil, in the belief that it is much lower than the price paid by France. It was explained to him that the difference is mostly VAT, which is not charged on exports. He then (irrelevantly) speculated on what the export price of the F-18E would be if no sales taxes or corporation taxes were charged. I've been trying to clarify the situation. As far as I can see, it's now clarified.

Thank you for your clarifications mate. Sorry for the misunderstanding. Cheers.

 

[Salty Dog]

No it is not clarified. Rather than go back and forth with you I have just chosen to spend my time doing other things. Briefly, sales tax in the US is not a simple issue. It is levied to varying degrees and items at all points in the supply chain when goods or services are sold. The only two generalizations that you can make about US sales tax policy is that it is very fragmented and raw materials used in manufacture are generally not taxed.

In effect it is a very relevant speculation that has no simple, forum ready answer.

It is crystal clear and very simple, there is no federal, state, or local sales tax for FMS from the USA. So tax is not a factor in any fighter package price.
-

 

[simdude97]

It is crystal clear and very simple, there is no federal, state, or local sales tax for FMS from the USA. So tax is not a factor in any fighter package price.
-

In the US, states and local governments collect sales tax. The Federal government has no jurisdiction in the matter when it is a business to business transaction as is the case when components are bought elsewhere.

 

[swerve]

No it is not clarified. Rather than go back and forth with you I have just chosen to spend my time doing other things. Briefly, sales tax in the US is not a simple issue. It is levied to varying degrees and items at all points in the supply chain when goods or services are sold.

I've looked for information on this, & everything I've found is very clear in stating that sales taxes apply to retail transactions. In some, it is clearly thought to be so obvious that it is not explicitly stated, but "retailer" is used interchangeably with "business" throughout, making it obvious on what the tax is levied. While I have, of course, only looked at a small sample of the authorities in the USA which levy sales taxes, I've not yet found one which (according to the tax guides published by the authorities) levies a tax on intermediate goods. Can you point me to one - just one?

It appears to me that if there are any, they must be very rare, & given that it is an avoidable (you set up your business making components in a different jurisdiction) cost, I can't see that it is possible that sales tax could be a significant component - if a component at all - of the costs of a complex product such as the F-18E, made of parts sourced from suppliers scattered across the USA.

In other words, I can't see why you ever mentioned it. The differences in rates of corporation & payroll taxes, & employers social security contributions (the latter are very high in France, for example) are far more important, but I don't see anyone suggesting that price comparisons should be adjusted for them. VAT is relevant only because it is charged on domestic purchases, but not on exports, & thus affects price comparisons.