People want service charge scrapped?

Service Charge = Tips?

If you read the news recently, you will come across news on the uproar over abolishment of service charge subsequent to the implementation of GST. According to a survey done by The Star, about 88% of the people opt for an abolishment of service charge.

Irony

Interestingly, why is it an issue now despite the service charge being around for decades? 

For & Against

Reason for Abolishment

• How can we ensure money flows from the employer to the employees?

• Service should not be proportionate to the value of meal.

• "Compulsory tipping" is not tipping. It is a form of charge.

Reason against Abolishment

• In event that the money really does flows from employer to employees, abolishment will greatly reduce employees' earnings. However, there is a counter argument for this, i.e. employer tends to reduce remuneration of employees knowing that they will be paid via charging customers service charge.

Suggestion

Unlike the GST which is mandatory under the Malaysian tax regime, service charge should not be charged at all. With this being said, businesses may still opt to embed a 10% service charge in their pricing by marking up their prices by 10%. Hence, in this case, receipts will not be showing any additional hidden charge such as the service charge. I believe the uproar is mainly due to hidden charges whereby consumers do not know the exact amount to be paid for a meal.

As a conclusion, I strongly suggest an all-in price mechanism as practised in the UK. What you see is what you pay!