SF sales tax of 9.88%?

[medieval12]

Trying to sort out a tax of 9.88% from a new, well-publicized SF restaurant from last evening. Current sales tax rate from San Francisco County is 9.5%:
http://www.boe.ca.gov/cgi-bin/rates.c...

With separate health care surcharge of 4%, combined tax is almost 14%. Granted, a ~0.5% difference is relatively small, but relative is proportional to three and four-figure prices for wine. Standard practice? Unusual? Additional tax for a new building or a local neighborhood tax?

[ML8000]

I think the short of it is, figure on about 32% on top of everything, or 1/3th (33%) for the quick calc.

9.5% tax + 18%-ish tip + 4% HC = 31.5%

A $50 meal = $66 out the door.

[medieval12]

Excluding tip, the rate would be 9.5% + 4% HC + 9.5% * 4.5% = 13.88% (or 31.88% based on above example). However, the tip is often based on the total or sales tax, so that would also increase. The effect is more pronounced for large bills.

I had not thought of a HC surcharge as a service charge. That seems to imply patrons are paying SF County a tax for health care in addition to 3.5-4% surcharge from the restaurant. Interesting.

On a more positive note, the '05 Bordeaux Rouge from Graves had a markup of only ~1.5x - kudos to that.

[Windy]

Where did you eat?

For what it's worth, I haven't seen a 4% surcharge anywhere except the 5% at Incanto which predated health care legislation. Hoping more restaurants are realizing it's a bad idea to nickel and dime (and quarter and dollar) their customers during a recession.

[Xiao Yang]

What's annoying is that when a service charge is added in lieu of a tip, as it is at The French Laundry, it's subject to sales tax,and later taxed again as income.

[Robert Lauriston]

SF's Health Care Security Ordinance isn't a tax, it's a mandatory expenditure of $1.23 (for businsses with 20-99 employees) or $1.85 (100 and up) per hour worked. Businesses can spend that on health insurance, reimburse employees for health expenses, contribute to a medical flex account, or pay it to the city.

So if a restaurant adds a charge to the bill to cover that cost, it's a service charge, and they have to pay sales tax on it.

Per published reports, Delessio and Incanto charge 5%, Cha Cha Cha, Pomodoro, Zuni, Epic, Waterbar, and Asia SF 4%, Rose Pistola 3.5%, Bacar 2.5%, Bar Bambino, Catch, Two, and Delfina $1.25 per person, and Slow Club, Luna Park, and Zazie $1.

Incanto imposed its charge in 2004 in response to SF's "living wage" law:

http://chowhound.chow.com/topics/2884...

[medieval12]

The issue is transparency.

For Zuni, the bill states a "4% Health Surcharge" followed by sales tax. That approach is better than the bill in question, which only listed subtotal, sales tax, and "SF Health Charge." Some restaurants verbally mention the charge (e.g., Delfina), while other restaurants make no mention but state it clearly on the bill (e.g., Zuni), while others just state "SF Health Charge."

With prices in this restaurant, meeting a mandatory HC charge of $1.23 per worker per hour should be straightforward (esp since staff were 'testing' $$$ bottles in spades).

If you dine in SF and the bill includes a HC surcharge, you are paying 13-14% before tip. By comparison, NY City's proposed rate of 8.875% looks pretty good.

Corollaries->Did not appreciate taxation and ownership of voluntary tips vs. service charges until this thread. I'll also leave the question of what happens when HC revenues exceed HC costs to others:
http://www.sfgate.com/cgi-bin/article...

[Robert Lauriston]

If you go to a restaurant with more than 19 employees without a surcharge, they probably had to raise prices.

For an employee working 40 hours a week, the HSCO mandatory expenditure is considerably less than the cost of health insurance.

[Xiao Yang]

I'm not sure what you are trying to figure our, but I'll take a stab. Was your effective bottom line tax 13.88 percent? That implies that the taxes were applied one on top of the other, i.e. 1.095 X 1.04 = 1.1388. Perhaps you subtracted the 4 percent healthcare surcharge from this and came up with 9.88 percent on the assumption that the two taxes were applied separately to the untaxed amount? Presumably they weren't applied in that way.

[medieval12]

That's it. Assuming health care surcharge=HC,

Total bill = subtotal (food+wine) + sales tax of 9.5% * (subtotal + subtotal*4% HC) + 4% HC.

The bill is misleading since the tax is listed as a separate line item before the HC surcharge.

Presumably, if the HC surcharge is listed separately, sales tax at a restaurant should be calculated only from food and wine (i.e., not HC)?

[SteveG]

There is no right answer, that's one of the reasons people say the original legislation is flawed. We should probably halt the discussion before it veers too far from food, because I think everything that can be said has already been said in older threads.

[Robert Lauriston]

In California, sales tax is charged on service charges, so on a bill of $100 plus $4 service charge, the tax would be $9.88.

If the bill lists the health care charge after the sales tax, I can see how that would be confusing.