Plus tax

I have exact change for you and Uncle Sam.

I have exact change for you and Uncle Sam.

Immediately after arriving in the US, as I was transiting from LAX airport to San Diego, I excitedly spotted an Auntie Anne’s Pretzels in the Los Angeles train station. I hadn’t eaten one of those salty buttery bundles of joy in years, so I made an abrupt beeline for the kiosk.

Since I hadn’t yet made it to an ATM yet, the only currency I had on me was the random collection of coins that I had transferred from my drawer to my money purse before heading state-side. It was like a pecuniary vestige of every country I had visited in the past two to three years: euros mingled with pounds, West African CFA francs clinking alongside Ghanaian cedis, and one Swiss five-franc coin standing on its own and giving you finger, silently saying “I’m a coin, but I’m actually worth $5.60, so you really should have bought yourself an overpriced coffee at the Geneva airport before you left, you idiot.”

And floating in among all that global currency were some good old American quarters, dimes, and nickels, which had evidently survived in those 2.5 years since my last visit to the US.  So I set about counting my coins, like the old lady that I secretly am, and found that I had a grand total of $3.51.  A pretzel cost $2.99. Perfect. I counted out the exact change as I waited in line to order my pretzel.

But when the sales clerk rang me up, she said “That’ll be $3.26, ma’am.”

Wait, what?

D’oh. I had completely and totally forgotten about the tax. And if there is one place you are going to notice the tax, its California: the golden state has one of the highest rates of sales tax in the whole country. In Los Angeles, the combined state and district sales tax rate adds up to 9%. Ouch.

The reason I had forgotten about the tax was because in most most other countries, sales tax is already included in the ticket price of the item. In the UK, for example, the Value Added Tax (VAT) is a 20% consumption tax similar to US state sales taxes. Unlike the US, however, all published retail prices include VAT. So, if an item has a price tag of £1.64, then you will pay exactly £1.64 at the till. The item in fact costs £1.37, and is taxed at a rate of 20% (£0.27), making for a total of £1.64. But you don’t see any of this, because the retailers have already factored it into their price lists and price tags. Now isn’t that convenient?!

I presume that the reason this sensible practice is not adopted in the United States is because it is a federation, where each state sets its own levels of sales tax, varying from 0% in Delaware to 7.5% in California (plus, there are also county and city level taxes levied on top of this). Since many large retail chains in the US span across multiple states and counties, it would be a logistical nightmare for them to produce hundreds of variations of price tags to stick on the same item in different counties and states; it’s more practical to just label items at their before-tax prices, and then calculate the additional tax at the register depending on location.

And if customers are expecting this, then that’s okay. But clueless foreigners, or equally clueless repatriates, may find themselves digging into their change purse to make up for the extra tax. Thank God I had just enough to buy that pretzel. Otherwise I would have been so disappointed that I might have joined the legions of beggars in Union Station to rustle up the extra $0.27.

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1 Comment

Filed under Money, Practicalities, Shopping

One response to “Plus tax

  1. Pingback: Pretzels | Home Strange Home

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