The Fabled VAT and Service Charges in Philippine Restaurants
Just this morning, I listened to a couple of complaints about establishments with misleading price tags. In some restaurants, customers gets mildly to extremely shocked when their bills come out much higher than the actual prices in the menu. The restaurants reason out that they have a note in the menu (usually in fine print), stating that prices are exclusive of the 12% value added tax and service charges.For everyone's information, such practice is unfair and illegal. A customer should be allowed to make decisions based on complete information. They should be able to make comparison based on prices presented in a standard format for all vendors.As explained by the Department of Trade and Industry, price tags or restaurant menus should cover both taxes and unit prices.
As stated in the Consumer Act of the Philippines, It shall be unlawful to offer any consumer product for retail sale to the public without an appropriate price tag, label or marking publicly displayed to indicate the price of each article and said product shall not be sold at a price higher than that stated therein and without discrimination to all buyers.
As emphasized in radio interviews, DTI officials remind establishment owners that price tags should be VAT inclusive. However, there is an issue that should be tackled—the service charges.
Based on personal experience, it can go as high as 10% and I will not be surprised if there are those charging more. Since there are restaurants that do not include service charges in their prices and simply adds it in the final bill, a customer can be in for a shock of their lives. Imagine being charged with an extra 12% (VAT) plus a 10% (service charge) in your bill. That's a whopping 22%. Call me stingy or poor but 22% is a lot. I like the idea of paying waiters a lot of money but there should be transparency, from the very beginning.
Since I haven't read any discussion about the appropriateness of service charges, I called to ask the DTI if: It is allowed to be charged; and if ever, Is it be required to be imbedded in the prices. The courteous operator replied that local government units have their own ordinances allowing or disallowing restaurant service charges and in regard to its inclusion to the price tag, the answer was not very clear. I shall be talking to a higher official for clarifications in this regard.
To my mind, it is very clear that anything that will be charged to customers should be clearly stated and included in the unit prices. After all, they shall be drawing it from their pockets. In addition, not selling anything higher than the price tag should mean that everything that the customers will have to pay for should be clearly stated and placed directly in front of the their faces.
Why will they hide from people, things that they will have to pay for? If they are paying for any service, they must know its price, beforehand.
