Daily Service Charges are now officially out of hand

[Tree_skier]

2 hours ago, DirtyDawg said:

Does the IRS treat tips differently vs. ordinary income? In Canada the CRA treats both the same.(Canada Revenue Agency) 

 

Having dealt with both I can tell you with great confidence that dealing with CRA is a much simpler process.  They take a lot more money but they are much easier to deal with at every level.

[Tree_skier]

29 minutes ago, ldubs said:

 

For credit cards charges some retail stores around here are giving an option to donate to charity by rounding up to the dollar.  I like that approach.   

I do not... I work for a non-profit and routinely donate to charity.  I'll keep the tax benefit to myself.  Corporations don't do it out altruistic virtue.  They do it so that you can pay to lower their tax payable. The administrative costs come out twice.  Once by the collecting corp and then again by the receiving charity.  

Edited December 10, 2022 by Tree_skier

[Liljo22]

22 minutes ago, jeh10641 said:

I never cruise for less than 10 or 11 days, more likely 14 to 20 days. Multiply that times $40 or $50/day and it becomes sizeable.  I agree that fee should be incorporated in the cruise price and let the lines pay a living wage. I always pay extra tips to my cabin stewards(esses) and anybody else who gives me outstanding service aboard.

For comparison sakes, a 16 day euro cruise in the cheapest Haven suite is $18k for 2 people.  So you are saying $18k is a good deal but that extra $800 in DSC all of sudden sends you to the poor house?

[Oceansaway17]

On 12/8/2022 at 4:10 PM, taglovestocruise said:

If the gratuities were part of the cruise fare then everyone would be paying, and that sounds fair. Crew would still pool all the added 18% that seems to be charged for everything. Have not heard of anyone trying to have the grats removed from the weekly bar tab. 

I think that is a good idea to just have it part of the fare. But no the want a base price to lure you in.

I would never go and have gratuity reduced as I feel it is tacky to do this.

[pcur]

No flamethrowing here.  I try very hard to take my mental "blinders" off and see what might be the reason from the cruise line's point of view. One thing that stick's out is the labor shortage all over the cruise industry, and in order to keep the crew, they might have to pay them more to do more work.  

 

If they raise the auto-tips, I will reduce the extra I give out in cash.  Except for the bar staff.  I get 6 complimentary drinks per day, and I will continue to tip those crew members, because the labor for them is the same, and they still deserve a tip.

 

I think once the labor issue is resolved, we will see some "creative" pricing that offsets the higher daily gratuity in some way.

[ldubs]

3 hours ago, Tree_skier said:

I do not... I work for a non-profit and routinely donate to charity.  I'll keep the tax benefit to myself.  Corporations don't do it out altruistic virtue.  They do it so that you can pay to lower their tax payable. The administrative costs come out twice.  Once by the collecting corp and then again by the receiving charity.  

 

Makes sense.  I just see it as a way for me to give spare change that likely would not otherwise be donated. I suspect the same would apply to most people doing these rounding up donations at the local hardware store.  I imagine a fair amount of money is going to the specified charity as a result.    

 

As far as the businesses lacking altruistic virtues, are you suggesting that they not have a tax deduction for charitable donations?  

[ldubs]

3 hours ago, footzz said:

As far as thr IRS is concerned, it all comes down to the definition of a "tip" vs. "gratuity". The IRS disagrees with most dictionaries and encyclopedias definitions of the term "gratuity." Most resources define gratuity as a "tip" or "payment for services beyond an advertised fee." The difference, according to the IRS, is that a tip is a payment offered directly to a worker and in no way processed or taxed by the employer. A gratuity is a payment provided to the employee that has been collected, allocated, reported and distributed by the employer. Simply put, tips are cash-in-hand that must be reported by employees, and gratuities are included in paychecks and accounted for by employers.

 

This is new to me.  I know there are rules for automatic or mandatory gratuities, but wasn't aware of the distinction you make.  

[DirtyDawg]

6 hours ago, Tree_skier said:

Having dealt with both I can tell you with great confidence that dealing with CRA is a much simpler process.  They take a lot more money but they are much easier to deal with at every level.

What can I tell you, we're Canadian, even our pickpockets leave notes behind saying; "Sorry." 😁

[Engineroom Snipe]

1 minute ago, DirtyDawg said:

What can I tell you, we're Canadian, even our pickpockets leave notes behind saying; "Sorry." 😁

 

This is taking politeness to a whole new level but one must respect the intent. Everyone must make a living. "Do you work for the governor young man?" 😁  The Beatles might have said, "The Tax-Man". Not far from the British shores are you? 🤣

[Ret MP]

As usual, I haven't read every post in this thread.  So, excuse me if I repeat what someone else may have said.

 

I don't know why cruise lines can't charge gratuities as a percentage of your cruise fare.  As stated in at least one other post, if you pay a fixed rate no matter what class, category, cabin you paid for, the less expensive cabins pay a much higher percentage of gratuity than the more expensive cabins.  20% of your cruise fare doesn't sound unreasonable to me.  As one that usually cruises Star Class (not bragging, just fact), I don't mind paying a little extra for gratuities (which I already do).  But, I don't think the policy of making the prepaid gratuities or making changes onboard optional should be changed.

[mek]

7 hours ago, Ret MP said:

As usual, I haven't read every post in this thread.  So, excuse me if I repeat what someone else may have said.

 

I don't know why cruise lines can't charge gratuities as a percentage of your cruise fare.  As stated in at least one other post, if you pay a fixed rate no matter what class, category, cabin you paid for, the less expensive cabins pay a much higher percentage of gratuity than the more expensive cabins.  20% of your cruise fare doesn't sound unreasonable to me.  As one that usually cruises Star Class (not bragging, just fact), I don't mind paying a little extra for gratuities (which I already do).  But, I don't think the policy of making the prepaid gratuities or making changes onboard optional should be changed.

IMO that would be totally crazy.  Not everyone pays the same rate for a particular cabin class - not talking about suites, Star Class......  Why should a cabin attendant be make less from me because I found a super low rate - which I frequently do.

[nelblu]

1 hour ago, mek said:

IMO that would be totally crazy.  Not everyone pays the same rate for a particular cabin class - not talking about suites, Star Class......  Why should a cabin attendant be make less from me because I found a super low rate - which I frequently do.

If you feel guilty then tip extra. It’s like using a coupon or discount at a restaurant and I base the % before discount. 
 

Remember the % goes in a pool and allocated accordingly. 

Edited December 11, 2022 by nelblu

[John Reid]

On 12/8/2022 at 8:54 AM, Diver2014 said:

If you can't afford to tip, don't cruise.  Flames, anyone?

 

Yeah, flawless logic.

And let's add if you can't afford your medications, don't live!

[Ocean Boy]

9 hours ago, Ret MP said:

As usual, I haven't read every post in this thread.  So, excuse me if I repeat what someone else may have said.

 

I don't know why cruise lines can't charge gratuities as a percentage of your cruise fare.  As stated in at least one other post, if you pay a fixed rate no matter what class, category, cabin you paid for, the less expensive cabins pay a much higher percentage of gratuity than the more expensive cabins.  20% of your cruise fare doesn't sound unreasonable to me.  As one that usually cruises Star Class (not bragging, just fact), I don't mind paying a little extra for gratuities (which I already do).  But, I don't think the policy of making the prepaid gratuities or making changes onboard optional should be changed.

Two same category cabins next to each other can sell for widely different rates yet require the same amount of service. I don't really see why the gratuities should be different for the two. The present system of charging gratuity per person in the cabin seems the better way in my opinion.

[Ret MP]

2 hours ago, mek said:

IMO that would be totally crazy.  Not everyone pays the same rate for a particular cabin class - not talking about suites, Star Class......  Why should a cabin attendant be make less from me because I found a super low rate - which I frequently do.

I didn't say anything about anybody making less $$ just because anyone paid less for a cabin.  All the gratuities are put into a large bucket (figuratively speaking) and then divided up amongst the various recipients.  Take the sum of all the on-board gratuity and divide it up as they do now, which I don't know the breakdown and don't care. 

 

I never reduce or remove my prepaid gratuities and I also tip everyone that brings me a drink, serves me a meal, and/or provides a service for me and I have direct contact with.  

[grandgeezer]

On 12/8/2022 at 6:54 AM, Diver2014 said:

If you can't afford to tip, don't cruise.  Flames, anyone?

Who said they couldn’t afford to tip? Maybe they feel it’s excessive, everybody has the right to their own opinion. I agree about the part about not cruising, if there is something about cruising that bothers you about the process, stay home. Complaining about something and still doing it gains nothing. I would be surprised if anybody from the lines even waste their time reading these type of posts, all they care about is $$$. Vote with your wallet. We’ve been voting since October 2019 with no end in sight. After averaging about 42 days a year, the withdrawal was painless and quite quick.

[Ret MP]

6 minutes ago, Ocean Boy said:

Two same category cabins next to each other can sell for widely different rates yet require the same amount of service. I don't really see why the gratuities should be different for the two. The present system of charging gratuity per person in the cabin seems the better way in my opinion.

I'm very much aware of the different categories of cabins, even if located right next door and/or timing of sales.  The same cabin may have several different fares offered until the final sale.  

 

By percentage of what you pay for gratuities, if I have the cheapest interior cabin, I'm paying a much higher percentage of gratuity than those in a Ocean View Balcony cabin.  Gratuities don't go directly to the employee/crew member, it's not a cash in hand system, for the most part, they go into an accounting system first then distributed to the crew.  As far as I know, the crew get the same break down of money regardless of the cabin category.  So, why should an interior cabin guest pay 55% gratuity (just as an example) and the Ocean View Balcony guest pay 10% (again, just as an example).  See post #171.  If the %, at the end of the cruise is the same as the existing system, all the crew is getting the same amount.  The industry would have to adjust to make sure that the crew is making the same as the pre-unfair system.  But, I believe, the crew would benefit by keeping up with inflation in almost real time, as the fare goes up, so does their gratuity amount (see below).  They don't have to wait, in some cases, for years for the cruise line to get an increase in their gratuity.

 

Also, if gratuities are collected on the basis of fare %, as the price goes up, so does the gratuity amount to the crew.  Hence, the crew is (hopefully) keeping up with inflation and the cruise lines don't have to make a major announcement that they have increased the amount of prepaid gratuities and piss a lot of folks off.  I've always thought that gratuities are a much better system if based upon a % of the cost of the product or fair market value of the product. 

 

When we went to a restaurant 20 years ago a steak meal cost ~$10.00, today it's more like ~$40.00 - $50.00.  We base our tip on service and a %.  So, the server is making a lot more today than they did 20 years ago if the base amount is considered to be ~15 - 20% of the total bill.

 

 

 

[Ocean Boy]

2 minutes ago, Ret MP said:

I'm very much aware of the different categories of cabins, even if located right next door and/or timing of sales.  The same cabin may have several different fares offered until the final sale.  

 

By percentage of what you pay for gratuities, if I have the cheapest interior cabin, I'm paying a much higher percentage of gratuity than those in a Ocean View Balcony cabin.  Gratuities don't go directly to the employee/crew member, it's not a cash in hand system, for the most part, they go into an accounting system first then distributed to the crew.  As far as I know, the crew get the same break down of money regardless of the cabin category.  So, why should an interior cabin guest pay 55% gratuity (just as an example) and the Ocean View Balcony guest pay 10% (again, just as an example).  See post #171.  If the %, at the end of the cruise is the same as the existing system, all the crew is getting the same amount.  The industry would have to adjust to make sure that the crew is making the same as the pre-unfair system.  But, I believe, the crew would benefit by keeping up with inflation in almost real time, as the fare goes up, so does their gratuity amount (see below).  They don't have to wait, in some cases, for years for the cruise line to get an increase in their gratuity.

 

Also, if gratuities are collected on the basis of fare %, as the price goes up, so does the gratuity amount to the crew.  Hence, the crew is (hopefully) keeping up with inflation and the cruise lines don't have to make a major announcement that they have increased the amount of prepaid gratuities and piss a lot of folks off.  I've always thought that gratuities are a much better system if based upon a % of the cost of the product or fair market value of the product. 

 

When we went to a restaurant 20 years ago a steak meal cost ~$10.00, today it's more like ~$40.00 - $50.00.  We base our tip on service and a %.  So, the server is making a lot more today than they did 20 years ago if the base amount is considered to be ~15 - 20% of the total bill.

 

 

 

I think this is a perfect example of how a gratuity based system is far more complicated than a salary based system.🙂

[Ret MP]

Just now, Ocean Boy said:

I think this is a perfect example of how a gratuity based system is far more complicated than a salary based system.🙂

That's probably very true.  But, it is what it is today in the U.S.A. and many other countries.  

[PWP-001]

20 hours ago, footzz said:

As far as thr IRS is concerned, it all comes down to the definition of a "tip" vs. "gratuity". The IRS disagrees with most dictionaries and encyclopedias definitions of the term "gratuity." Most resources define gratuity as a "tip" or "payment for services beyond an advertised fee." The difference, according to the IRS, is that a tip is a payment offered directly to a worker and in no way processed or taxed by the employer. A gratuity is a payment provided to the employee that has been collected, allocated, reported and distributed by the employer. Simply put, tips are cash-in-hand that must be reported by employees, and gratuities are included in paychecks and accounted for by employers.

 

THIS IS NOT CORRECT.

 

Employees who hold a position where it is usual and customary to receive tips/gratuities from guests are required to report those tips to their employer.  The amount of those tips are included in the employee's W-2 in box 1 as earned income, which is subject to INCOME TAX.  Additionally, both the employer and employee are each also obligated to pay social security tax of 6.2% and medicare tax 1.45%, subject to annual thresholds.

 

Whenever a gratuity, tip or service charge is automatically added and mandatory, that amount imposed is also subject to STATE SALES TAX (in many states) which is paid by the guest.  When that is distributed, the actual amount --which could be less-- that is given to employees is also subject to income tax and FICA (Social Security and Medicare Tax)

 

Common practice is for guests to leave a "tip/gratuity" when they pay by credit card.  The employer is very much involved in that transaction, given the employer pays out that tip in cash to the employee usually the same day.  It still is subject to income taxation, through tip reporting.

 

Add a line to a check and call it "a little something-something" and despite the name, the IRS for income tax purposes considers it earned income and subject to the taxes described about.  

 

The mandatory nature determines application of state sales tax, despite what name is used.

 

Lastly, because someone is going to bring it up....   In foodservice establishments, if ALL of the tips/gratuities REPORTED by tipped employees ARE LESS THAN 8% of total sales where customers would normally tip, then the employer is responsible for allocating that shortfall (using an IRS formula) to those tipped employees, reporting it in Box 8 on the W-2 labeled Allocated Tips.  This is taxable income to the employee.  It's also can be considered a red flag or for an audit of unreported income.

 

Thankfully none of that applies cruise line employees who certainly are not subject to USA employment/wage & labor standards.

 

One source:  https://www.irs.gov/pub/irs-news/FS-15-08.pdf

 

 

 

[mek]

1 hour ago, Ret MP said:

I didn't say anything about anybody making less $$ just because anyone paid less for a cabin.  All the gratuities are put into a large bucket (figuratively speaking) and then divided up amongst the various recipients.  Take the sum of all the on-board gratuity and divide it up as they do now, which I don't know the breakdown and don't care. 

 

I never reduce or remove my prepaid gratuities and I also tip everyone that brings me a drink, serves me a meal, and/or provides a service for me and I have direct contact with.  

I never reduce or remove tips, give extra at the end of the cruise to those who directly provide a service to me, and always give a cash tip for each of my voucher drinks, but personally think pooling tips is a bad idea.  It assumes everyone provides the same level of service, which is definitely not the case.

[FamilyCruiserUK]

So back to the OP, at what amount of daily grats do people feel would make them think about other cruise lines or stop cruising? 

25 

30 

40

Etc.....

[Ret MP]

1 minute ago, mek said:

I never reduce or remove tips, give extra at the end of the cruise to those who directly provide a service to me, and always give a cash tip for each of my voucher drinks, but personally think pooling tips is a bad idea.  It assumes everyone provides the same level of service, which is definitely not the case.

Agreed.  But, the present system, as far as I know, does the same and going to a % system wouldn't change that just make it more equitable for the guests and give cost of living raises, almost in real time to the crew.  On the other hand, where countries don't allow tipping or it is not customary, everyone makes the same no matter how good or how bad the service they provide.  Where tipping is allowed or customary, if I don't think I received a level of service that I think it should be, I leave less or none.  That's a wake-up call to the person providing the service and incentive to do better or be a little more consistent. 

[Ocean Boy]

1 hour ago, Ret MP said:

  Where tipping is allowed or customary, if I don't think I received a level of service that I think it should be, I leave less or none.  That's a wake-up call to the person providing the service and incentive to do better or be a little more consistent. 

Isn't that a problem with auto-gratuities though? Say your cabin steward does a really poor job. If you reduce the auto-gratuities then the entire service team suffers. No one knows why they were reduced or who caused the reduction. So the action isn't likely to be a learning experience for anyone.

[Ret MP]

1 minute ago, Ocean Boy said:

Isn't that a problem with auto-gratuities though? Say your cabin steward does a really poor job. If you reduce the auto-gratuities then the entire service team suffers. No one knows why they were reduced or who caused the reduction. So the action isn't likely to be a learning experience for anyone.

Agreed!  However, like I've said in other post, no system is perfect and I never reduce my pre-paid gratuities.  How do I combat poor service and my tipping?  As stated, I tip extra for people that do face to face services with/for me, if deserved.  So, the server in Chops that give me great service tonight gets an extra $10.00 or $20.00 ~.  The server in Chops gave me bad service last night and didn't get an extra tip or reduced tip.  This server tonight got a great extra tip and he/she probably told the server from last night and knows why the server from last night didn't get a tip or reduced tip, they know who works hard and who doesn't, I'm sure.  That's for servers, stewards are a different story.  I actually tell them that I didn't reduce the pre-paid gratuities but my extra tip was/is reduced or none at all and explain why?  Being retired Army and Law Enforcement, I have no problem telling people where they stand with me and why I do things.