The provincial government of Quebec recently enacted legislation that requires tips on terminals to be calculated based on the pre-tax subtotal, rather than the full amount after tax. The mandate is part of Bill 72, which aims to improve transparency in service pricing and consumer transactions. So as an example, if a guest’s meal costs $100 before tax, a 15 per cent tip will now be $15, rather than $17.24, which includes Quebec’s combined 14.975 per cent provincial sales and federal taxes.
The new rule also states that operators need to present suggested tip options in a neutral way, rather than trying to influence consumer decision-making, so no bolded or highlighted choices are allowed to be included.
Bill 72’s aim is to help protect consumers and reduce administration by simplifying how contracts, pricing, and tipping are presented to customers, and it affects restaurants and grocery stores primarily. Along with the new tipping rules, the legislation also includes debit card fraud liability, stating that consumer liability is limited to $50 for unauthorized debit card transactions unless gross negligence is proven.
When proposing these changes, Justice Minister Simon Jolin-Barrette, (also the minister responsible for consumer protection) noted that 62 per cent of Canadians reported leaving a higher tip than previously planned due to the options presented at the pay terminal.
“We shouldn’t have to feel pressure when we’re paying the bill,” said Jolin-Barrette. “Tipping needs to remain a discretionary choice for consumers.”
Some Quebec operators are worried that this change may affect revenues and mean lower incomes for those relying on tips, but Martin Vézina, vice-president of public affairs at the Quebec Restaurant Association, maintains that the industry will not be significantly impacted by the change. He suggests that operators may even benefit from the change with reduced credit card fees and less tip income to declare at tax time.
While Ontario has not taken any action in this realm yet, it’s a possibility as tip-flation, trade uncertainty, and consumer concern continue.
