The tipping point | columns | Hindustan Times
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The tipping point

A tip is unaccountable money that can't be taxed. With the sepulchral Hasan Ali Khan coming under the scanner of the Enforcement Directorate and the Supreme Court suspecting that someone can't make gargantuan money just by betting on the right horses, I thought of grabbing some other burning issue this week. Indrajit Hazra writes.

columns Updated: Sep 10, 2011 19:29 IST
Indrajit Hazra

A tip is unaccountable money that can't be taxed. With the sepulchral Hasan Ali Khan coming under the scanner of the Enforcement Directorate (ED) and the Supreme Court suspecting that someone can't make gargantuan money just by betting on the right horses, I thought of grabbing some other burning issue this week. But with the special court looking into the Hasan Ali case throwing the ED's 'evidence' out of the window, I'll stick to talking about the untaxable money called tips.

Unlike commissions or cuts or kickbacks, tips are decided only after a service has been rendered. You go into a restaurant, have a nice meal, like the waiter who's served your table and his services, and leave an extra amount - traditionally 10% of the total bill amount- that goes to the waiter, not the restaurant owner or the government. If the service sucked, you make a statement by paying little or no tip.

Tipping has a crusty snobbish side. People going into an expensive restaurant usually leave a 10% tip on the bill no matter what the quality of service is. This is because leaving money that's over and above 'what everyone pays' heightens one's sense of status. And if the manager of the restaurant comes and kisses all your rings on all your fingers, what harm can that do especially when the other tables are watching.

Strangely though, in a dhaba or less fancy eatery where prices are significantly lower, the same customer is happy to leave loose change. Yes, the eating experience and the ambience may not match the posh place. But that's why the prices are so cheap, you stingy, class-conscious idiot!

It makes sense to 'reward' someone for his service when there is a distinct qualitative element to that service. But why on earth do we tip the valet parking guy? Surely, there are only that many ways to park your car and then bring it back to you? The plumber and the electrician, too, either fix the shower or the inverter, or they don't.

From the point of view of the service provider, an in-built 'service charge' has a strong appeal over tipping. Instead of leaving the '10% tips' norm floating about in the air - far more people tip less than 10% than those who tip more than 10% - the service charge fixes the 'tip' amount. Also, the 'service charge' takes away the social awkwardness involved in paying tips.

Some like Yoram Margalioth of the Tel Aviv University Law School have even argued that tipping may actually "facilitate prejudice". Referring to a Yale Law School study, Margalioth, in 'The Case Against Tipping', points to how people in New York tend to tip minority taxi drivers less, while minority passengers tend to leave lower tips, "thereby giving cab drivers a revenue-based incentive to refuse to pick them up". Luckily, here in India, we don't really tip our taxi drivers and not having the energy to haggle with any auto driver is automatically tipping him generously. But the harmless point about regular good tippers getting a better service can become serious when regular customers, who don't - or aren't able to - tip well, get a bad deal. Over the years, the delivery time of our local pizza boys has shrunk. This can be connected to bigger tips, which can be connected to me slowly earning more (and thereby valuing money less).

So are there any upsides to tipping? Well, if you want to encourage good service, a tip is a powerful gesture. The service provider - waiter, masseur, street performer, hotel room service provider, sex worker, pizza delivery boy or beautician - gets to know that the customer knows the difference between good, pedestrian and bad service. And who can deny the pleasure one can get for tipping someone for a job done 'surprisingly' well.

Just ask one question if you're confused about whether to tip or not: can his job involve a service that can vary in quality?

PS: Depending on what you think about the quality of this column each week, you could send (or not, if you don't care for that week's column) any amount you wish as tips to the following address: Indrajit Hazra, Hindustan Times House, 18-20 Kasturba Gandhi Marg, New Delhi 110001. Only cheques and cash please. ihazra@hindustantimes.com