Nor, I believe, do Australians.
If the bill is $7.05, you use a nickel.
He was insufficiently psychic to know he would only need three. So he carries four, the maximum that will be needed for any single transaction.
Navy commissaries overseas rounded to the nearest penny. I kept track for several months whilst stationed in Scotland – the difference between marked price and cash used was never more than seven or eight cents, and when I stopped doing this I think I was four cents to the good.
No, Amusement parks, sports venues, etc. don’t figure out an underlying price that gives a round number after tax; you pay a price that includes tax; at the end of the day, they count up receipts and pay tax on that. They can do that because there’s no competition - once you’re in the ballpark, everyone pays the same.
IN ALL CASES, the tax is x% of total sales, including taxes. When you buy from the grocery store, if the prices on the shelves add up to $100 and the tax rate is 8%, you don’t pay $108, you pay $108.70. At the end of the day, they add up all of their receipts and pay 8% of that to the state. 8% of $108.70 = $8.70
You can’t MANDATE that a store set all of their prices to be something that, after tax, is an even number; that infringes on the stores to set their own prices. Notice how many things end in .99 or .95 - your eye says 9.99 is not 10, but we all know that it might as well be 10. There have been some stores that advertise prices tax included; they get pummeled by other stores advertising shelf price and ignoring the tax in the ad. You may be smart enough to know that a $105 price (tax included) is a better buy than a $99 pre-tax price, but not everyone thinks that deeply.
Several thoughts. Most of which you mentioned but maybe didn’t notice.
Rounding the price of each item to the nearest nickel is unnecessary. Businesses still like the psychological boost of the .99 pricing. Only the total of your purchases needs to be rounded. Becasue that’s the number where the cash is changing hands. If you’re buying one item the result is the same. But on e.g. $150 worth of groceries, the rounding on the total would be at most 3 cents, and rounding each of the 50 items in your basket first is unnecessary.
Taxes. Taxes will always be a messy area and add odd pennies here and there. In places like amusement parks where every sale is taxable it’s easy to incorporate them into the prices. But many retailers sell to both taxed consumers and tax-exempt businesses or charities. For whatever accident of history, it’s common in the USA to quote the per-item pre-tax price and then add tax if needed at the end. We could, decades ago, have standardized on quoting with-tax prices and the tax exempt folks would receive what amounts to a discount on the merchandise total. But that’s not how consumer behavior evolved in the USA and we know how hard retraining consumers is.
You said: “… Instead of a soda being priced at $2 plus .16 tax for a total of $2.16 , it gets priced so that the total comes to $2.15 or $2.20 tax included. …”. That’s still rounded. The rounding is just hidden inside choosing the price a priori such that the post-tax outcome is 2.15 or 2.20 and not e.g. 2.16 or 2.17.
Things get rounded because not all prices are easily set to handy fractions of a dollar. Let’s say you want some fish, and it’s priced at $1 a kilo. You grab a fish, it weighs 433 grams, you get charged 43 cents.
The way prices are rounded here in Australia (and I’m pretty sure everywhere else that does this) is: anything ending in 0 or 5c is unchanged. Anything ending in 1, 2, 3, or 4c is rounded down to 0. Anything ending in 6, 7, 8, or 9c is rounded up to 10c.
ETA: Rounding only happens with cash transactions, using a card you’ll pay whatever the actual price is because single cents still exist, they just don’t have a physical token.
All this is coded into cash registers and EFT devices. It’s actually pretty simple. Even if you pay cash, it’s almost always processed through an electronic device anyway.
If a retailer were to try ripping off every second transaction by rounding them all up instead of rounding 50% of them down, it would show up very quickly on their records and be a huge red flag to the tax office. It’s not impossible, of course, but the effort involved in cheating your way to riches by stealing a few cents from every second transaction wouldn’t be worth the risk.
Every American who buys gasoline deals with rounding already. As far as I know we have never had a 9/10th of a cent coin.
Maybe some do - but I have absolutely seen prices listed the way I describe - a price, the tax and then the total.
Eh, not so sure on that. On the example I used above (8% tax on a $100 order), the actual tax would have been $8.695652(etc), but it gets rounded to $8.70. Your electronic transaction is still going to be the $8.70.
EVEN TODAY, we are rounding to the penny. OK, so now we round to the nickel. Or we round to the dime (and remove the quarter?) We’ll get over it.
I often pay for small grocery purchases with cash and will use some pennies if the last digit of the bill isn’t divisible by 5. Sometimes I even pay with exact change if possible. Too bad for the folks after me in line.
Most of the time? That’s really weird. I literally have never had this to me. They punch it in their computer, it says $5, and I get a $5 bill back. Maybe 5-10% of the time they’ll look at me odd and not understand what’s going on, and I’ll tell them just to punch it in, but that is quite rare in my experience. (And those who don’t use cash registers that figure out change for them deal with cash enough to know what’s going on.)
Or are you saying they give you a bunch of coins to get rid of them? Haven’t had that happen to me. I have had a bunch of ones dumped on me very very occasionally, though.
I suspect what he means is the cashier punches $20 into the register which computes $4.83 as the change. And maybe even dispenses the 83 cents into a cup for the cashier to hand over to the customer. Just then @Mighty_Mouse hands over his 17 cents. Helpful in intent, but too late and hence unhelpful in the execution.
So the cashier proceeds to take the $20 bill, give him back his 17 cents, plus give him the 4.83 per the register’s computations and maybe dispensing. Which totals to him receiving back 4 ones and a dollar’s worth of coins.
Not multiplied by millions of transactions, it isn’t.
Admittedly, the individual consumer isn’t making millions of transactions in a week or a year. But they’re making a lot more than one.
Yes, I can see good arguments for stopping producing pennies. But ‘it makes absolutely no difference to anybody if everything increases in price by 1 to 4 cents’ isn’t one of them.
I hadn’t realized that some laws forbid such rounding. How are they enforced?
Setting the prices so they end in a 5 or a 0, when otherwise they would have ended in a 1,2,3, or 4, is rounding. The rounding is just happening at a different stage in the pricing than you’re imagining.
You’d have to price it differently in every county-or-equivalent in the USA. There are different county and different state sales tax rates. Adding the tax separately is a practical requirement for any company doing business over any significant area in the USA, whether or not any law requires it (which, as far as I know, it doesn’t.)
Good point.
I’ve generally got my wallet out and open by the time the cashier’s got the total ready. I don’t think it actually takes me longer to count out cash than to pull out a card, put the card right way around in or on the specific machine (they vary), wait for the card to authorize, and put it away again.
(I agree that people who have their change at the bottom of a purse or buried in one of several possible pockets and who waited until the total came up to start digging for it are annoying. So are people who waited until the total came up to start digging for a card similarly buried.)
Yeah. You have to hand them the change right along with the bills; or at least say ‘Hold on, I’ve got the change’ as you hand them the bills and hand them the change immediately after before they’ve had a chance to punch in your payment. I’ve very rarely had a cashier look puzzled at this; but I suspect they were new at the job – cashiers new at the job often are puzzled by one thing or another, including things not affected by the payment method.
Huh? In what state does that occur?
I can buy both taxable & non-taxable items in every grocery store near me. On my receipt there is a subtotal for my purchase, a tax line, if applicable, & then a total line. Their computer system knows what is taxable & what is not taxable (at least as well as items were accurately entered into the database). I just looked at two receipts in the recycle bin, on both of them I paid literally pennies, less than a dollar on over $100 of groceries, well below the 6% sales tax rate. Any grocery store sending in tax on the day’s receipts is significantly overpaying & it what state do you pay tax on tax?
I disagree, my first thought is that many/most grocery stores will round each item up to the next nickel. making 2¢ more per item, times the # of items in your cart, times the number of customers per day would be a material boost to their profits, one which they can get away with because ‘it’s not our fault, the gub’mint made us’.
As a corollary look at gas prices whenever they take refineries unexpectedly off line in Houston for a weather-related shutdown whether that’s an incoming hurricane or a winter’s freeze. Immediately, the price goes up a nickel or so per gallon near me but when they reopen, it takes days for it to drop back down because, “we already paid for this gas & the less expensive gas needs to work it’s way thru the system up to us”. Uh-huh, sure, then why didn’t the price spike take as long to occur as the price decrease? 
If done properly, it is. Anything from 0.00001 to 0.0249999 gets rounded down to 0; anything 0.025 up to 0.0499999 gets rounded up to 0.05. Now, if someone nefariously ALWAYS rounds up to the consumer, then, yes, it can run into big money.
I was simplifying. Yes, there are many things in a grocery store that are charged at one rate while others (cigarettes, alcohol, etc.) that are taxed at another rate.
So, if you buy $100 of groceries at 2% tax and $250 of alcohol at 8% tax, your final bill will be
$373.78. At the end of the day, the grocery store totals up your $102.04 in groceries and $271.74 in alcohol along with everyone elses and pays the government 2% on the groceries and 8% on the alcohol.
Even here, I’m simplifying over the myriad of different rates and types and and and, but as an example, it’s still 2% of the total sales eligible for 2% tax are submitted to the state. Please note that all tax %s are made up for the fictional state of Ohioa, and let’s say the first example of 6%, the guy was going over state lines to Wiscosa.
No, I’m giving them 20.17 all at once.
To ring in “20.17” and then hit the tender amount key they have to count the change I gave them. Which [for reasons] they are unable or unwilling to do.
To ring in $20, they literally hit a $20.00 button on the register.
Related to this is concern [paranoia] about scammers trying to confuse the cashiers. Way back when I was a cashier (in the 1990s) part of our training was about how to remain calm when faced with confusing situations. Of course back then 75% or more of transactions were cash.
I think my problem there is the otherwise - if we are literally talking about pennies, I’m not sure how anyone (other than maybe the merchant ) decides whether the item priced at $1.95 was rounded up from $1.94 or down from $1.96. Remember, this was in the context of a “fair rounding rule” , which sort of anticipates that the prices will be listed and then rounding will happen - unless there’s some jurisdiction that requires that an item I bought for $1.33 must have a retail price of $2.66 and therefore I can only round to $2.65 not $2.70
You’re right, I didn’t think of that, most likely because the places I’m likely to pay cash don’t do business/set prices over a significant area.
I read Lord_Feldon’s post as meaning that we’d delayed until inflation had made pennies entirely worthless. I don’t see what “waiting so long” would have to do with the question of whether the rounding’s done equally in both directions, or only by rounding up.
I will point out that my guess is that there are a lot more things priced in figures ending in 8 or 9, especially 9, than in figures ending in 1 or 2; so even if the rounding is done fairly to the nearest nickle, the overall effect may be that far more things get rounded up than rounded down. Some people seem to be assuming that the price per item will stay the same, and what will be rounded will be only the total amount of purchase – but I think that’s unlikely for most types of items.
In which county and, where applicable, which city?
That was why I asked how rounding laws are enforced. There are a whole lot of factors that go into deciding price; how do the enforcers determine that the base being rounded from would otherwise have been 2.66 and not 2.68?
I don’t think so. Retailers will still exploit customer psychology by pricing an item at $9.95 rather than $10.00.
The smallest denomination US coin ever issued was the half cent. But some individual states issued 1/10 cent coins, specifically for paying sales tax on small purchases.
I agree with your assumption, but the rounding is done on the total. If I buy 6 of something at $1.99 each, the total is 4.94 and is rounded to $4.90.
That’s exactly what I think. The price per item is whatever it is. The rounding is done at the end. (and only for cash purchases, of course. If someone is truly concerned about their $0.02, they can pay with a card)
I still pick up pennies from the ground whenever I see them.