> Likely, it's just more of the media, talking heads, and youtube personalities trying to turn a nothing into something, story.
It's not. Some US states have laws on the books that make it illegal for retailers to round up. The turmoil is that if the retailer can only round down to the nearest five cents, then they stand to lose from one to four cents per cash sale for any sale that is not a multiple of five cents. Add those one to four cent losses up over a large enough number of transactions and the retailer stands to lose a considerable sum over the course of a year. And many retail shops already operate with thin margins anyway, so the loss from "always round down" could erase whatever thin margins some shops already operate under.
Problem is it isn't just the $5.99 rounds to $6.00 it is tax. If the end cost is $6.36 will the state be happy with that one penny less? For any state 1 penny per transaction is millions of dollars per year! (note that I had to change your price from 4.99 to 5.99 - 5.00 times any tax rate is an even multiple of 5 and so cannot make the point).
The tax is applies after the total is added up so there is no other choice When I was a kid a value meal at McDonalds was $3.18 after tax, but two of them was $6.37 - that extra penny over all the meals McDonalds sells in a state adds up to a lot of money and they were not going to let that go.
Individual stores generally only have to deal with one. Set the prices at the store, and make them tax-inclusive while you're at it. This isn't rocket science.
Companies serve billions of web pages per second. We can't handle 12,000 tax calculations?
If only it were that simple. Some sales taxes are conditional at the point-of-sale. Different customers may pay a different tax rate. This creates a situation where the display price will be incorrect part of the time and may not round to 5c or whatever the legal quantum is.
I wonder if this could encourage retailers to start advertising tax-inclusive prices. That way there's no rounding in the customer transaction (if they set all their tax-inclusive pricing at multiples of 5 cents), and then the sales tax would just be calculated in aggregate, and paid electronically with no rounding.
We had a coffee shop that tried to do it. Listed prices included taxes, and the total prices were in nice whole numbers (IE, $2 for a cup of coffee, $5 for a latter, $8 for a sandwich, etc.). But regulators stopped them and they had to go back to listing the prices without the sales tax.
It's frustrating how much needless friction gets put into the system.
So you're telling me that when I buy stuff for 12.34 that is not the amount I have to pay, but some bigger amount that I have no way to calculate precisely unless I know exactly which sales tax rules are applicable for my purchase? It's baffling how backasswards the US is.
Is the tax unknown at the time of setting the price? If that's the problem, set the final price at price + tax, deduce tax, display that. What's the matter?
If its a wide region ad (can even be just across a metro area) showcasing a price then yes, they wouldn't know the price at a given store because the tax rates can change in less than a kilometer.
If there's a TV ad for a medium pizza for $10 at a chain they can't possibly know the tax rates for whatever actual store I'm going to go order from.
And the listing on a website won't know until I actually put in my shipping information.
I doubt that most people in the US know the local sales tax. Let alone any change that may occur due to laws changing or traveling. I'd like to see the out the door price listed but that throws the 99 cent game off retailers like. Also I don't shop very often but Aldi US is the only place I've seen the eink price displays, the rest still have paper.
If your shop can be wiped out by losing that little on each transaction it wasn't long for the world anyways... Retail margins are thin by industry preference but they're not 1-4 cents per transaction thin.
The shop will. It can be a lot of money in aggregate. It also creates really pathological purchasing incentives, where spreading out large purchases over several small purchases can yield significant savings for the purchaser.
There's one exceedingly simple answer:
Keep the penny (possibly a new one that is cheaper to make).
We're basically breaking into jail on this one, creating more problems than we're solving.
Hi from Argentina! Here we unofficially deprecated the AR$10, AR$20 and AR$50 bill, so the smallest one is the AR$100 bill (~US$0.07). Every price include taxes.
What are they selling? Candies one by one? Inside the candy store everything is rounded to a multiple of AR$100. A single candy is AR$100. You many get an offer of 3 candies for AR$200, or 2 small candies for AR$100, or other fancy candies in packages of 13 for AR$1000. Everything else is more expensive, like AR$700 or more, but all multiples of AR$100.
The photocopy shop near my home has a copy for AR$120. They usually sell many copies, so a 20% is relevant. They have a stash of AR$20, but it's probably the only shop nearby. I also collect the AR$20 just to pay the photocopies, just to be nice to avoid finishing their stash and also because I don't know what to do with the AR$20.
I guess a single apple is probably a problem. It cost like AR$400-AR$500 depending on the weight. Someone very smart can learn to choose and apple with the exact weight to get a AR$499 apple and pay AR$400 :) Luckily inflation changes the price so it's difficult to learn. Also AR$499 will be illegaly rounded to AR$500. And most people will buy more than 1 apple, let's say that the total is AR$10,000 and AR$100 is only a 1% that is lower than the spoilage of rotten fruit.
It's not. Some US states have laws on the books that make it illegal for retailers to round up. The turmoil is that if the retailer can only round down to the nearest five cents, then they stand to lose from one to four cents per cash sale for any sale that is not a multiple of five cents. Add those one to four cent losses up over a large enough number of transactions and the retailer stands to lose a considerable sum over the course of a year. And many retail shops already operate with thin margins anyway, so the loss from "always round down" could erase whatever thin margins some shops already operate under.