When sales tax was first introduced in Japan (about 15 years ago, IIRC) there was no standard policy so some stores displayed price including tax, and some not. Some displayed both. That couldn’t last because stores that displayed the tax-excluded price looked cheaper. Now all stores display the price without tax.
When I first moved here to New Hampshire where we have no sales tax (except on certain items, mostly things like restaurant food and hotel rooms - things that tourists often buy, hehe), it seemed very odd to pay the same amount as the displayed price, especially when it was a round number.
You really ought to add those numbers, not multiply them, so theres a “mere” (:)) 688 possibilities.
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Ha! Michigan goes you one better. Buy a car as a resident of another state with less than Michigan’s 6% slaes tax, and move here (even several years later) and they’ll charge you the difference between the two sales taxes on the price of the car when you bought it (not even its current value). Technically, this applies to everything, but you have to register your car, so they’ll find out about that.
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Duckster makes the same point I wanted to make, but I’ll still say it too. Many people in the US want it to be plainly visible exactly how much is going to the gummint, and this includes me.
Also, as a practical matter, not including the sales tax lets a store advertise a lower price.
The “lower apparent price” sounds nice, but even without that (which has a limited effect, since all neighboring stores are subject to the same taxes, the logistics of including the tax in the price would be overwhelming.
Many items have the retail price printed directly on the packaging. Trying to get the correctly priced package from the manufacturer or producer (which might be in Thailand, Taiwan, or China) into a Wal-Mart warehouse, then out of the warehouse and into the correct store would be a horrendous nightmare.
There are three K-Marts within 10 miles of my house in counties that charge 5.5%, 6.5%, and 7.5% tax. If a truck routed to one of those stores had to be redirected to a different store for whatever reason, all the prices on all the packages would have to be manually re-marked before the items could be put on the shelves. (At which point, if the ultimate receiving store had the 7.5% tax, the customers would simply begin peeling off the higher priced sticker and fighting with the cashiers when the bar code rang up the correct price with higher tax.)
At this point, we’re used to it and a lot of energy has been invested in perfecting the current practice, so even a scheme that allowed inclusive tax pricing would immediately run into the cost of changing the practices. (And, at that point, the issue of apparent lower pricing would become an objection.)
Is there any significance to the fact that you pay tax on the sum total cost of all the items, rather than pay the sum of the taxes on the individual costs of each item?
Many stores segregate the tax on each line item, and in most cases, this is the correct way to charge the tax under most state laws. Normally, the tax is applied to each individual retail sale. Some states have gross receipts tax, rather than sales tax, and in that instance, the tax is on the total business receipts.
It should be noted for the OP that sales tax is not a US tax (ie, it’s not administered, audited or regulated by the IRS). There are 45 states and DC that have some form of retail sales tax. Hawaii (a gross receipts state) actually has a small wholesale tax. And even in those states without a sales tax (Oregon, Montana, New Hampsire, Alaska and Delaware) there are similar taxes on rental cars and hotels. There is no US sales tax (except for federal excise taxes on communication services or gasoline, etc.).
The “sum” issue was certainly true in Michigan (back in the 4% days–I’m not sure about the current rates).
When the initial salestax was imposed in 1962, the merchants immediately raised a cry that they were being killed by the tax, because the state was requiring them to hand over tax based on gross receipts, so ten .10 cent packs of baseball cards collected no tax (the 4% tax not beginning until it hit the .25 mark) while the merchant was required to pay the $.04. Extended across thousands of sales, this added up.
The legislature’s response was to set up a tiered rate and I have no idea who worked out the scale), where a penny was charged on a .13 purchase, two cents on a .37 purchase, three cents on a .57 cent purchase, and four cents on an .82 (?-not sure, been gone too long) purchase. So a .10 item would be charged no tax, but two .10 items would be charged a penny.
When I’ve seen the tax- included price displayed, (usually at concession stands in theme parks or baseball stadiums), there’s nearly always in smaller print a breakdown of the price of the item and the tax on it. For example it will say SMALL SODA .92 + .08 tax $1.00
On a more practical note, doesn’t it make shopping a bit of a nightmare? You put what you need into your basket, keeping a mental tally of how much you have in your pocket, and then get to the checkout and suddenly find you don’t have enough; or are you all so 'merkins so rich that it doesn’t matter what the total is? 
No, it’s just that we’re used to adding the sales tax to the estimated total of Stuff we get, so we know roughly how much money we’re going to need.
Sales taxes in New York City are ridiculously high, so I just add an extra 10% in my head. Real easy.
No, we’re all used to it, just like after I spend a few weeks in London I get used to paying the actual amount listed, sans tax. Unless it’s a hotel, in which case they sock me with an extra 17% VAT that wasn’t advertised.
And to tell the truth, if 5% makes a difference in my grocery shopping selections, then I need to take a harder look at my big financial picture.
FTR, I’ve also been charged a 17% VAT on the following items whilst in London, on three different occasions:
- A PC 9-pin serial cable from Dixon’s.
- 35mm film.
- A paperback book from a news agent.
Fierra tells me that was illegal for them to charge me that, but when I complained no one cared. So it looks like there is a sort of sales tax that applies, at when you deal with criminals. :rolleyes:
What, you mean they added the sales tax to the advertised price? Do you think they were taking the piss out of you? That’s bang out of order.
I once saw a Japanese family in Baker Street get charged £5 per ice cream… in 1977, this was.
Mind you, if you’re a tourist, you are allowed to claim VAT back in the airport in certain circumstances as long as you’ve kept your receipts.
Well, it really can make a difference to some of us. Thankfully I’m solvent now, but I haven’t always been. When you’re trying to live off £5 a week, 5% can make a lot of difference. Of course, if I were somewhere where the differential was naturally factored for, then I would have worked it differently.
To be perfectly honest, I can’t think of the last time I even factored in the cost of tax when making a purchase. Then again, I haven’t bought a car or $5000 HDTV any time lately, so what do I know? In fact, the only time I think about it is when a store has something for 10% off, then I just think - “eh, it’s like it’s tax-free”.
Sorry about my math on the earlier calculation - there’s a reason I was a liberal arts major!
Generally speaking, essential grocery store items in the USA are non-taxable. However, the definition of non-taxable varies from state to state.
Not any more difficult that going to a restaurant and having to mentally calculate the tip.
They could have been, but they still charged me the extra 17%…
Forgive me for seeming insensitve. I cannot imagine living off of 5 quid a week. Even the poorest of the poor in the US receive an awful lot more government benefits than (about) $8 a week. 
The rates don’t vary in US taxes in bands, it is just that, for some reason, they are not calculated as a percentage with rounding. The tax is calculated by looking up what the amount should be based on the item price. So, with a 6% tax, there will be bands defined such as:
$0.92 - $1.07, tax = 0.06
$1.08 - $1.23, tax = 0.07
So you will see that there is no way to get a final price of $1.14.
So RealityChuck is correct that it can be impossible to get some prices to end in .99.
An important difference is the amount of the sales tax. With a tax of only 3 to 5% as in Japan or some US jurisdictions, leaving it out does not seem so important. In Ireland, with a 21% rate, it would be ridiculous - the stated price includes all applicable taxes.
Another difference is that in Japan the sales tax is relatively recent, so people still consider it to be an extra. In countries that have had VAT for as long as anyone can remember, it is just another component of the price.
If you think leaving out the sales tax gives you a feeling for how much of your spend is going to the government, you are kidding yourselves. At every stage of manufacture, distribution and retail there are taxes incurred that all contribute to the total, from excise on fuel to social insurance for the checkout operator.
I’m going to hijack here, but the principle is similar. It’s not so much taxes being separate that bugs me, but that US companies are allowed to advertise prices that exclude many other things. Take my local phone bill. I take the base service, @ $17.45, plus $2.00 for call forwarding to voice mail. That would be $19.45 plus tax, right? Oh no. I also pay:
Federal Universal Service Charge 0.53
FCC Local Number Portability Line Charge - Line 0.35
FCC Charge for Network Access 6.00
Emergency 911 Charge. 1.10
Telecommunications Relay Service Fund 0.15
Plus tax of $1.96.
so I get an unadvertised $10.13 added to a bill of $19.45.