Include sales tax in market prices

By Matthew Muir | Staff Writer

Imagine this scene: You walk into a restaurant, order a $5 sandwich, pay with a $5 bill and get your food. Does anything stand out to you? There’s one glaring omission that should become the standard across our economy: the lack of added sales tax at the register.

Now don’t get me wrong here, this isn’t going to be a long-winded rant claiming taxation is theft or anything like that. Taxes serve an important government function, and we should all be glad for, or at least begrudgingly accepting of, their existence. However, what taxes shouldn’t be is overly complicated, and the ubiquitous practice of excluding sales tax from an item’s listed price makes life overly complicated for the consumer.

Not including sales tax in list prices unduly shifts work from the seller onto the consumer. More times than I can count, I’ve wanted to buy something and had to whip out my phone’s calculator to see if I had enough cash on me to cover the purchase. If I have enough to pay, the new sales tax amount is a mild inconvenience; if I’m short it feels like a deception.

Add to this the variance between states and even cities and counties in sales tax, and trying to find the exact cost of a purchase before being rung up goes from inconvenience to ordeal. Someone from Montana, a state without sales tax at any level, may be caught completely off guard by the 8.25% tax in Waco. An easy way to avoid this confusion is to list sales tax in the price so consumers of any background know what their total will be just by keeping track of what they’re buying.

In some other countries, this isn’t a novel idea but is required by law. In the United Kingdom, the cost of the Value Added Tax (the equivalent of sales tax in the US) is already included in the prices of items in stores, and the responsibility falls on the seller to subtract the required tax from this amount. Some businesses in the United States employ this same method, but it’s up to the discretion of the seller.

Obviously, if a policy like this was implemented, businesses would immediately raise their listed prices to compensate. I think it’s unrealistic to not expect them to round up a little bit in the process, but I don’t see this as a complete negative. Even if prices do go up by a small percentage, I think having the information up front that an item is going to cost an exact amount will make it easier for consumers to make better decisions about what they buy, offsetting this slight increase. There’s also no reason to prevent sellers from showing how much of the price is going toward the sales tax; after all, the whole point is to show the total cost of an item, not pretend sales tax doesn’t exist.

Will businesses including sales tax in their prices make a huge difference in anyone’s lives? Probably not, at least not after the initial transition. But is it the right thing to do in the interest of honesty and transparency for the consumer? Absolutely, and it’s time this country hopped on board.