ARE GRATUITIES BECOMING A SERVICE TAX?

Eric Newman, California State University San Bernardino, U.S.A.
James Estes, California State University San Bernardino, U.S.A.

Published in

JOURNAL OF INTERNATIONAL FINANCE STUDIES
Volume 18, Issue 2, p27-34, October 2018

ABSTRACT

The cost of services are higher than advertised because of taxes and gratuities. Gratuities have become normalized and expected rather than a gift of thanks. They are no longer consider a gift to insure service since the gratuity is expected and provided after the service. Service providers are using gratuities to compensate their employees as a planned part of employee income. The total cost including service and taxes should be provided to the consumer before having to make purchase decisions.

Keywords

Gratuity, service tax, tipping, service


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