Graham Bell: Tipped off

No tax is being collected on billions of dollars in undeclared tips income. Photo / Getty Images

Just reward for good service, says Graham Bell.

I recently returned to the United States for a holiday. I have been there a few times in the past so I was anticipating the culture of tipping people which we Kiwis find so distasteful.

What I discovered this time only served to worsen my own abhorrence of the practice.

Now I have always accepted that there are times when people involved in service industries deserve a tip for really good service. That always seemed fair to me; even if tipping has traditionally been relatively rare here in New Zealand.

That rarity hasn't stopped many restaurants, particularly in Auckland, from including a suggested tip when the bill arrives at your table. I suspect many Kiwis ignore it.

I was disappointed with the way tipping has evolved in the US.

Bar service there has certainly changed a lot since my first visit there, 14 years ago.

We liked to go into a bar, sit on a barstool, enjoy friendly discussions with locals and get the feel of the people, customs, sports and the like. Drinks were readily produced by bar staff and money would be put into and taken out of a glass or jar as needed. Then when it was time to leave we could leave what we felt was an appropriate tip for the barstaff in the glass.

Nowadays there seem to be fewer bar seats and a lot more waiting staff to bring drinks and meals to tables. So it is now a tedious and time-consuming process of: 1) Find a table; 2) Try to attract the attention of a waiter to take your order; 3) Wait for the drinks to arrive; 4) Attract the waiter again for the next round; 5) Wait for the drinks to arrive, etc. Then, when it is time to go it is back to 1) Attract the waiter and ask for the bill; 2) Wait for it to arrive; 3) Check the bill and attract the waiter again to collect it and your credit card; 4) Wait for it to come back. Then when you get the bill it will have a space on it for the tip, together with suggested amounts from 18 per cent up to 35 per cent of the total — often conveniently worked out for you. Now this tip is expected — whether the service has been good (rare), bad (common), or indifferent (more common). There is no way of knowing whether any or all of the tip is actually going to reach the waiter or bar staff involved in your service. I have to confess I struggled to avoid getting irate at this recurring fiasco.

To worsen my annoyance I learnt that tip money is often "pooled" by all the staff in some of these places and a percentage is retained by the house. That seems to me to fly in the face of what the practice was intended to achieve — rewarding low-paid service staff for good service.

While co-operating with this method for the most part I found a cash tip to a particular waiter in the beginning made things move smoothly. So in effect we were having to tip twice. Tips for taxi drivers, baggage handlers, bell-desk staff and others from day to day are usually in cash and tend to have the desired effect.

The tipping regime is a huge economic black hole for the US Government. No tax is collected on billions of dollars in undeclared tips. The practice of adding it to accounts helps, but has not improved things for the consumer.

My wife and I went into the Hard Rock Cafe on the Las Vegas strip for a post-show drink one night. While she found a table, I struggled to attract the attention of a particularly disinterested barwoman.

While I was waiting I saw her putting cash tips into a large jar on a shelf. I finally got our drinks and went to a table my wife had selected. A guy collecting glasses had cleared this table and promised my wife he would return and clean it for her. This didn't happen in the half-hour we were there. When we were ready to leave I went over to the bar to pay. The same woman shoved a note of the cost across at me. I looked at it and produced the exact amount and passed it to her. She looked at it and said: "Is there something wrong, sir?" I told her that I was unhappy about the very slow service, the dirty table and the fact that they were pooling their tips. "What?" she said. I pointed out that people giving poor service (such as herself) were being rewarded the same as those giving good service.

She looked at me with contempt and sniffed "Well that's the way we do it here", before turning on her heel and stomping off.

While not wanting to encourage people to contribute to the black hole, I would suggest visitors to the US should stick to the initial cash tip for a selected waiter to ensure good service. If it starts to wane, slip that person another $5 or so to keep them keen. It is up to you whether you add a tip to the account at payment time. If you are challenged, point out that you have been tipping in cash and pay the basic bill only.

In a past era, baggage-handlers, porters, bellboys and the like were almost always tipped with coins. Now giving people coins as a tip is frowned on. They will gladly accept a $1 note, but turn their noses up at $2 or more in coins. I saw a guy given coins for loading bags into a taxi at the Railway Station in Washington DC in 2012. He looked at the coins and spat on them with contempt; even though he did put them in his pocket before handling someone else's bags.

Yet another drop into the black hole. But we can let Mr Trump worry about that.