Some people don’t
tip on the total bill, but go through the gymnastics of removing the
tax first (“I’m not tipping on the tax!”)
Let’s check the
math.
Let’s assume the
taxable item in question is $100 before taxes (this just makes the
calculations easier for the cheapskates).
On $100;
GST at 5% is five
dollars
PST at 7% is seven
dollars
(total tax rate is
12% and amount is $12)
Therefore total tax
for our item is $12 on $100 (which incidentally is the same as a 12%
tip)
Calculation “A”
– tip on pre-tax amount:
Item + tax + 15% tip
on non tax amount
(in this example,
15% tip on $100 is $15)
$100 + $12 + $15 =
$127
Net amount with tip
is $127
Calculation “B”
– tip on amount after taxes:
Item + tax
$100 + $12 = $112
15% tip on $112 is
$16.80
Item + tax + 15% on
net amount
$100 + $12 + $16.80
= $128.80
Net amount with tip
is $128.80
(or the equivalent
of (just less than) a 17% tip on $100 before taxes. One could just
argue they are giving 17% instead of 15%).
Tip difference is
$1.80, less than $2 per $100
Seriously, people
bitch about less than 2%? Less than $2 per $100 or less than $1 per
$50. How many years did you work in the retail and service
industries? How did you like the “enormous” paycheque? A couple
of bucks here and there can make quite a difference to lower income
earners.
Years ago (before
bills were easily separated out between parties) there were several
times I went to group dinners and at the end of the meal people
brought out calculators as quickly as their cash or payment card at a
restaurant. I never went to dinner with those people again.