This is a question that should cause, particularly, our restaurant employees to be apprehensive about the future, considering the uncertainty of the survival of the 15% service charge, which benefits the employee, in the face of the recent imposition of the 13% GST, which benefits the government.
This question can be linked to a series of other related questions which include: “What if restaurant patrons find it difficult to pay a full 28% (15% plus 13%) on the price of their meals?” “What if patrons discontinue eating out at restaurants?” and “What if proprietors decide to close their restaurant doors due to low or diminished sales?”
The question “What if service charge goes out the window?” was asked on the weekly program, Just the Facts, by the host, the Honorable Cora Richardson-Hodge, on Monday, 18th July. She noted that since service charge is not mandated by law (to be collected from the customer and be paid to workers) then the restaurateur has the option to discontinue charging it to the customer. This would mean that, in addition to the base price of the meal, the customer would pay the 13% GST only. And the employees would, therefore, lose their 15% service charge.
Mrs. Richardson-Hodge said: “It is the private sector that Government depends on in order to ensure that it can operate. So, Government has to ensure that while it is taxing, it does not put these businesses at risk of closure. I have seen that at some restaurants service charge is an issue. And, of late, some restaurants no longer add it on, for they are looking at ways in which they can decrease the amounts that their guests pay. There are complaints in terms of the cost of food at the restaurants, having to pay both service charge and GST.”
Her co-host and colleague, the Honorable José Vanterpool, weighed in on the issue: “It has been my experience to go to restaurants and hear complaints from guests directly. It is concerning, because I have heard some guests making such comments to the effect that they are not sure if they can visit Anguilla again, as a consequence of the GST that has been imposed.”
“The fact that some establishments have gotten to the point where now they have to remove service charge is rather scary,” he said. “When one looks at our hospitality industry, service charge has been one of the key pillars that many employees rely on. In some instances, they depend more on the service charge than their regular wages. One of my concerns is that by restaurants asking customers to pay an additional 13% in tax, we have infringed upon patrons’ ability or their willingness to tip the waiter or waitress at the end of their meal.”
Mr. Vanterpool spoke directly to The Anguillian about his views on the matter: “The fact that the 13% GST increase the cost of a meal at a restaurant, people’s flexibility in spending on eating out is impacted. What this means is that we are going to see a reduction in persons eating out, and those who do eat out would not be inclined to tip their servers because of the additional 13% that they are required to pay.
“The workers in our hospitality sector used to rely on tips and service charge as key supplements to their salaries. So when tips or service charge are no longer benefitting the worker – who themselves have to pay GST as consumers at stores and supermarkets – then there is a reduced flow of personal income coupled with a demand to pay GST from that meager flow. This poses a great disadvantage to our people.”
In certain instances, service charge has already gone out of the window. Mr. Vanterpool described the measures that had to be taken by some employees: “The fact is that in some instances restaurateurs have held meetings with their employees to discuss the implications of GST on their businesses. Realising that ‘half a loaf is better than no bread’, employees have had to make the voluntary sacrifice of forfeiting service charge in order to retain their jobs,” he said.
