Tipping debate stirs compliance pot
Experts are split on the prospect of tipping in New Zealand, with some saying it would lower hospitality wages while others argue it could increase the government tax take.
E tu union industry co-ordinator Jill Ovens said, if encouraged, tips would act as an extra tax on diners and would not necessarily recognise good service if people felt obligated to tip.
The comments follow Deputy Prime Minister Paula Bennett’s Monday call for New Zealanders to tip wait staff who gave ‘‘excellent service’’.
Deloitte tax partner Mark Lash said officially if a worker received a tip, they had to contact the Inland Revenue Department to disclose it and pay tax on the amount. If workers did not do that, as was highly likely, more tips could boost under-the-table income.
He said the Government would see some of the tip – via tax – if workers owned up but argued it was not an extra tax cost for the customer if they did not.
It would be similar to paying a holiday surcharge, Lash said.
Ovens also voiced concern that chefs and kitchen staff did not see enough of the tips given to restaurant wait staff.
New Zealand’s mostly cashless society meant tips were now paid on eftpos machines and not put in the democratic tip jar, she said. ‘‘It probably ends up in the pocket of the employer.’’
Hospitality New Zealand advocacy and policy manager Dylan Firth said restaurants could decide whether they let individual staff keep tips or made them share tips with all staff.
He said more tipping would lift job satisfaction and reduce the industry’s high staff turnover.
But Ovens said an increase in wages would do that. She said tips would not necessarily cause ‘‘rock bottom’’ hospitality wages to decrease, but would discourage them from increasing.
Statistics New Zealand data for the June 2015 quarter said the median hourly wage for the retail trade and accommodation industry had increased 3.9 per cent to $16.63 in one year. New Zealand’s adult minimum wage is $15.75.
Firth said compulsory tips did not encourage good service, but he wanted New Zealanders to become more inclined to tip exceptional staff. ‘‘The United States system is not one we are after.’’