Thursday, May 26, 2022

Meanwhile, Let’s Start giving it: Is it Right to Tax Tips?

In a country where tipping is not common, the Court of Cassation recently declared that tips must be taxed. With the exception of a few instances where they make a difference.

Only two things in life are guaranteed: the bill at the end of the dinner and taxes. The former is unyielding, while the latter is occasionally unsure, but they always show up.

The tips must be charged in some way. There? Yes, according to the Court of Cassation: even if the money does not originate from the employer, it is still labour income, and the Irpef must be paid.

“Liberal disbursements received by the employee in connection with their employment, including so-called gratuities, are within the purview of the all-inclusive idea of income established by Presidential Decree 917/1986, and are thus liable to taxation.”

The Court of Cassation had previously made such a judgement fifteen years before, in 2006, when it decided that the gratuities of casino croupiers should be taxed.

Until now, however, tips have been deemed to fall under the category of small-scale gifts (article 783 of the civil code), which are exempt from taxation, according to a circular issued by the Revenue Agency in 2008.

Now, however, it was the Revenue Agency that initiated a tax assessment, which quickly escalated into a legal battle that reached the Supreme Court.

True, the statistics in the specific example from which the sentence was derived are far from modest: an employee of a magnificent hotel in Sardinia was paid 83,650 euros in a year (Sum so precise, established as, among other things.

You’re probably wondering why it wasn’t a modest amount of money spread out by hand or placed in an envelope.) However, you find it more intriguing to think about advice in general rather than just one situation.

Meanwhile, Let's Start giving it: Is it Right to Tax Tips?
Image by Peter Stanic from Pixabay

The Rest, Tip

And the final point: it’s more of a phrase than a method of action. Nobody ever told him to keep the remainder; at best, he told the cab driver. As you may be aware, tipping in a restaurant or bar is a rare and unusual occurrence in Italy.

In Naples, for example, it is customary to leave a ten or twenty-cent coin (once: one hundred or two hundred lire) on the bar counter with the coffee receipt: but these are little quantities, and the customs are strictly territorially confined.

Figures that are no less little, given the proper proportions, are those that generally leave even those with the foresight to consider it: in most situations, it is precisely the remainder in the currency, thus from 4 euros down to a few pence.

It is tough to calculate the 10% or even 5% of the account figure as accurately as possible. Consider this: if you go to a restaurant with three other people and spend 200 euros, do you leave 20 euros as a tip?

Congratulations, but you’re one of a kind. The majority of consumers are willing to pay more in exchange for greater disbursements.

Even worse now that electronic payments have (finally) taken hold: whereas before it might occur to us to add something to the staff when handling banknotes, now putting your hand on an ATM and withdrawing money are two operations that belong to two different mental spheres – and often also material spheres.

Not only from the perspective of the giver but also from the perspective of the receiver, the tip issue is distinctive and unequal.

In actuality, what happens to tips? There are two types of management and interpretation: personal (if you receive it from a waiter) and table clearing (if you get it from a waiter).

This is a terribly unjust method of treating people, especially kitchen employees, and it is rarely utilized (other is the tip to the single rider, to say).

The undifferentiated collecting is more common, with the total being distributed among all at the end of the month or week: specials are near to the coffers of many locations for this purpose, and piggy banks or huge mouths are used.

Then there’s the restaurant owner who doesn’t provide cash tips but instead uses the money to buy things for his staff, such as bottles or chocolates to set on the table for dinner as if he were giving them a present.

In a completely separate tale, we also know that waiters in several northern European nations might anticipate a tip and earn 10% more than their agreed-upon income.

The apotheosis, however, is in the United States, where the payment of individuals working in catering and delivery is made up of two items: wage and tips. It can be seen plainly in the trade union battles that have erupted in recent monthsi: employees and the National Restaurant Association are fighting over a variety of issues, including raising the minimum wage and abolishing the minimal tip.

Those who have seen an account appear in America and then saw a rise in their bill know about tips, and have attempted to avoid paying them since the waiter had been particularly rude: no, you can’t pick, it’s not a gift you give if you’re doing well, it’s an obligation.

In any event, even if we’re talking about percentages between 10% and 15%, these are never sums that compare to the 80 thousand euros made by the above-mentioned Sardinian hotel employee.

More than tips, it appears to me that in that case, we should discuss donations made to ingratiate themselves with those in positions of power: similar to gifts given to doctors and other professionals at Christmas or other occasions (by the way, those donations, 200 euro bottles of wine, should not be taxed, right?).

 

Tip that passes you

If you’re not a big fan of the tipping system, here is the place to be. First and foremost, because they appear to you to be a means of passing on business risk to employees: they allow the entrepreneur to pay a basic fixed salary, and the rest is a kind of producing premium, a percentage of sales similar to that paid to real estate agents – with the notable exception that people who work on piecework or commission have little control over production, whereas it is unquestionably not dependent on the waiter or cook how many people enlist their services.

Furthermore, the restaurateur is the one who keeps costs low, and the opportunity for the worker to survive is left to the alea, to the generosity of the private individual.

Then you don’t like the tip system, just like you don’t like an economic system that redistributes income through individual charity. You may not appreciate the emphasis on individual responsibility and merit in global crises that plainly require governmental answers, such as the battle against global warming.

However, Cassation’s decision may serve as a catalyst. Meanwhile, we can’t fight for a better economic system if we don’t fight.

While this position is not stable, many experts are changing industries because they are no longer willing to suffer under these conditions, and the ones that stay are contested and have the ability to tear better conditions.

Meanwhile, why don’t we start offering tips as customers? To restock not just the state’s coffers, but also the pockets of the working class.

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Tobias Kumwenda
From passion to (aspiring) profession, this is what prompted me to enter this project: Travel and Hospitality Industry. The desire to work in contact with a world that has always intrigued and fascinated me.

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