Friday, 21 August 2015

Losing my Australian filter: hidden costs...

One of the great things about buying anything in Australia is that the ticket price is the price of the item - with a few exceptions that we can put down to human error, with the item being in the wrong spot the main culprit, although finding out that the item is "on sale" is always a nice surprise. Anyway... My point is that in Australia that $7 sandwich costs $7. Jeans for $50 cost $50.

Things are a little different in the good ol' US of A...

That $7 sandwich is taxed at 8% (roughly the tax charged on items in Kansas), and then there's the 15-20% tip if the sandwich is from a cafe or restaurant. Let's pretend we're feeling rich and generous and we'll tip the waitstaff 20%. So: $7 plus 8% tax AND 20% tip. And that's 20% of the bill which includes the tax.

That $7 sandwich now costs $7.56 after tax, and $9.07 after the generous 20% tip of $1.51.

We can round that all down and say that our $7 sandwich cost us $9, and the waitstaff still received a reasonable tip.

That shop assistant who we buy those $50 jeans from does not get a tip, but there is still 8% tax on the jeans. Once that is added those jeans that seemed like a reasonable purchase cost $54. It's not totally outrageous but it's still a hidden cost and it still frustrates me, because the bigger the ticket price, the bigger the price hike sales tax.

When we arrived I tried my old trick of adding up the prices of grocery items as we went along, just to get a sense of how much our shopping was going to cost. Well, let's just say that my efforts were in vain and that I gave up on the process pretty quickly because there was an 8% surprise at the checkout. It was annoying to say the least.

Why don't they just add the tax before putting prices on menus, stickers, and labels? I really don't know. Perhaps it's because there is taxation from three different levels of government on any item, and the levels of government want their cut of sales tax clearly marked, clearly theirs, and having the tax added at the checkout is the simplest way the Americans can do it.

(*sigh* I can't change the system...)

Before coming to the USA we were warned about the tipping and how it was the done thing, but no one talked about the tax that is added at the point of sale. I guess it's an easy thing to forget if you're just passing through, especially when everything seems so cheap. For me, I'm reminded of the addition of tax with every single transaction, no more so when buy things online and the tax does not help me get to the "free shipping" threshold (and I only aim to reach it, if the threshold is $50 or less, because it's a waste of money otherwise - but this is a tale for another time...).

Plus tip? Plus tax... I'm sort of used to both of these hidden or added costs, but clearly it still bothers me enough to write about it.

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