Most bars that I go to charge you $7.00 for a $7.00 craft beer draft pint and no receipt is given. One newer place (same city) charges the $7.00 plus a sale tax plus a city luxury tax. You get a printed receipt with every drink. Why do it this way? Is the receipt just to explain the questions that are sure to follow when your $7.00 beer costs $7.28 or whatever? If everyone else in town includes the taxes in the price why do it differently? I think I remember some chain doing the same thing but it is very unusual, in my experience.
I saw that happen in my town, too. It is annoying. I think it is partly due to how drinks are taxed at different establishments. If a bar/restaurant makes most of its money (or above a certain percent) on food, the beers are not taxed. If a craft bar mainly sells beer and little or no food, the beer is taxed. I think it is easier for the craft bar to just say it is a $7 beer, but technically make it $6.72 plus 28 cents tax.
Happens in Washington DC too. No idea why
“$7.00*” *plus tax sells better than “$7.28”.
:dubious: Depends on your jurisdiction as to whether the sale of alcoholic beverages are subject to sales tax, not on whether you make money on food or not.
Assuming you are in a jurisdiction that taxes the sale of alcoholic beverages:
The decision to sell a beer for $7.00 including sales tax, or sale it at a price of $7.00 plus a 4% sales tax, is really left up to the proprietor. The guy selling it for $7.00 including the tax is really selling it to you cheaper, because he selling to you for $6.73 plus 4% sales tax. You as the consumer are paying the tax regardless.
Maybe the receipt is because they found that a lot of their clientele itemize and want to claim one or both of the taxes as deductions. Do a lot of the people who drink there have pocket protectors and arm garters?
Maybe the bar owner doesn’t think they should be taxed on liquor sales and are making a point by illustrating, on the receipt, the tax in question.
When Washington state went from having a state-controlled liquor system to allowing stores like BevMo to sell directly to consumers, I visited a BevMo - on each price tag, the price was broken down to show BevMo’s “usual” price and then the various taxes and fees added on by state regulations.
That way, you can’t complain to BevMo that the prices are too high - you can complain to the people responsible for the taxes.
(I know this is basically what the OP posited; I’m just elaborating with a personal anecdote.)
Maybe the owner simply comes from any of the other sectors in which the standard American practice is to list base price and it’s the customer who needs to track sales tax, tip, etc.
Every bar I ever worked at calculated the price of the tax into the beer. So the beer’s actual cost is 6.43, but we’d charge a round 7 which represented the beer plus a .0825 city and sales tax. That made it easy for bartenders to do the math in their heads when they were in a hurry.
That is also why I imagine that some restaurants have gone to adding the tax after and requiring the staff to provide you with a receipt. It’s pretty easy to calculate the cost of a round of drinks, get the money and provide change. Some waitstaff and bartenders take advantage of that and the money doesn’t get rung up on the register.
tl;dr answer: individual receipts including tax on top of the advertised drink price are a way to cut down on inventory loss/theft.
We were just debating this at work yesterday for a new distillery we were writing a business plan for. My partner preferred to include tax in the price and round to the nearest quarter so that paying and making change was simple. I prefer to figure out what my cost and profit is for the drink and then treat sales tax as a pass through above that. When every one is paying with credit cards it really doesn’t matter and most people are used to seeing six $7 cocktails - $42 taxes - $4 total $46 on their receipt so it never gets a second glance.
I don’t think so – in most states, sales taxes & liquor taxes apply no matter where it is sold.
But other things, like property taxes or zoning requirements may be different for ‘bars’ vs. ‘restaurants’. And liability insurance! Enough to make businesses want to be seen as one or the other.
This may depend on the clientele of the business, and how they pay. For a neighborhood bar, people may pay mostly in cash, so an even $7 price will make it much easier for the staff. But a downtown hotel bar, with mostly business travelers, paying by credit card (and on expense accounts) – the taxes added to the $7 charge won’t make it any more work when ringing up the charge onto the card. So the few cents extra they make is worthwhile.
Could you do both - make the final price a round, clearly-delineated number for transparency purposes and for the cash payers, but still note the portion of it that is taxes on the menu and/or receipt?
Sure there is no reason you couldn’t have round final prices but then let people know how much of that number is taxes. I don’t know why you would do the work though. Where I live sales tax is 4.5% total. You have two choices; one is to say my cocktails cost $7 and sales tax is 31.5 cents the other is to say my total price is $7 so then my drink must cost 7/1.045 or $6.6985 When figuring out pricing and profit margin $7 is easier to work with than $6.6985 but a final price of of $7 is easier to work with than $7.315 so it just depends on where you want to make your life slightly harder.
In the end, I would say the customer doesn’t really care about the difference between $7.32 and $7 for their daily pint particularly if they are mostly paying with a credit card. If its a mostly cash based business then it’s probably worth it to simplify paying for your staff and the customer.
You’ll find that people paying bills in bars are a varied lot. Some are concerned about a wife or boss or accounting department who will review their receipts so they pay part card, part cash. Or the folks who only bring $20 to limit the amount they spend in one sitting. Or the people with a movie to go to who insist on paying completely for each round as it arrives so they can dash out when they discover they’ve got ten minutes to get there. Or Mr. Hey Big Spender who doesn’t want to be bothered with the tab until the end of the night because that’s low class.
When I was in college I worked for a hotel with two locations and when I did the accounting, in one hotel, they had us back the tax out, and in the other we added it in.
Odd since they both had the same comptroller.
Is the newer place a chain that operates in a bunch of jurisdictions? It’s illegal to include taxes in some states.
There are places that commonly do this- snack bars at sports venues , amusement parks move theaters etc. The price list will be something like Hot dog 1.84 Tax .16 $2.00. It lets customers know that tax is being collected and minimizes change giving- all the prices with the tax included end in .25,.50,.75 or 00 which means you don’t have to ever give someone 42 cents in change.
This is important. If the bartender doesn’t give you a receipt, there’s a chance that there is theft going on.
In Michigan, sales tax is levied on the seller. They are allowed to pass it on to the customer if they provide the customer with a breakdown of how much is owed for the purchase price and how much is being passed through for sales tax. If a seller doesn’t give someone a receipt showing the sales price and sales tax, then they owe sales tax on the entire amount of the purchase, not on some calculated value based on the full purchase price including sales tax. It must be separately stated, or it’s part of the gross receipts that are taxed.
At least, that’s how I think it works based on my experiences with it. Other states’ sales tax laws may be different.
By the way, it’s very popular for stores to run specials where “they pay your sales tax”. This just means they don’t tack on sales tax to the purchase price in determining what you owe them. They always pay your sales tax, just most of the time you pay them that amount first.