Sunday, August 21, 2011

To tip or not to tip

Tipping (which is inaccurately claimed to be an acronym for a phrase such as “To Insure Promptness”, whereas its etymology comes from its earlier meaning of “giving, passing, handling”) is an old tradition consisting of leaving some extra money in appreciation of a good service. It seems a good idea, out of deference to a servant, to the point that it may not be polite to leave a restaurant without a tip. In some countries, tipping is expected and fixed (between 10 to 15%, depending on the place) and in some other cases it is a must. When you travel around, one of the first concerns is to check the tipping protocols in each country.
But this is not so simple: tipping has a dark side and it may be detrimental to the patron and to the serving staff. Let’s take a closer look.
First, tipping is usually a good excuse to pay lower salaries, as tips round up the wages. Therefore, employers save some money in salaries and the proportional part of taxes, which are eventually paid by the patron in the form of voluntary tips. In Spain, according to the latest Annual Labour Cost Survey drawn by the National Institute of Statistics, the hotel and catering business offers the lowest salaries, less than 1,000 €/month, and this is in part due to the promise (which is not always fulfilled) that tips round up this salary. In other words, the argument that tips benefit the serving staff is false. They just earn less money and they pay fewer contributions, so they have less social allowances when needed.
The second problem is the invisibility of tips: they are not registered, so they are not taxed. Tips are literally undeclared income, black economy, which is so damaging for people’s welfare. It is difficult to quantify the amount of money wasted in tips, precisely because tips are invisible, but it is a huge amount of money. If tips were declared and taxed, we could build up hospitals, hire more doctors and teachers or improve pension plans. There are no definitive figures, but according to the Spanish National Institute of Statistics it would amount to 3,500 millions euros. We only offer the figures in Spain, but figures are likely to be more or less similar worldwide.
If the owner of a bar or a restaurant considers that the price appearing in the ticket does not include service, the solution is clear: just include it. And then this service should be taxed, as it is the case of bookshops, stores or groceries, just to set some examples. This extra money can used to increase the salaries of the hotel and catering business, which should be at the same level as the rest of services. Next time we ask for the bill, just think about it.

Click here to download and print out some cards with the arguments against tipping to be left on bill trays in bars and restaurants so that you do not lose face as a meanie.


  1. Tipping protocol in Spain:
  2. Annual survey of the labour cost drawn by the Spanish National Institute of Statistics:
  3. Spanish national accounts by the National Institute of Statistics:
  4. Some cards with the arguments against tipping to be left on bill trays in bars and restaurants:


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