Curious About 6.25 Percent Sales Tax

CBS

Last week a sales tax hike from 5 percent to 6.25 percent was passed in Massachusetts. This increase will go into effect next month, but many people are curious about that quarter of a penny and since there is no quarter-penny, how do you pay the new tax?

Stuart in Medford asks, "What's the sales tax on a dollar? I assume seven cents will be paid?"

John in Dedham said, "I'm curious if the state is going to begin minting one-quarter cent tokens."

One Massachusetts business owner is already doing just that.

With sanders, grinders and drills at Stoughton's Pearson Machine Company, owner John Pell makes a quarter-cent token.

Since there is no quarter-penny, how do you pay the new 6.25 percent sales tax?

"There's going to be a tax of 6.25 percent," John Pell said. "So where does the rounding go? To 6 or to 7?"

Pell is among the curios, but Bert in Norwood is among the conspiracy theorists.

"Retailers will round up! Where will all the quarter, half and three-quarter cents go?" Bert said.

In order to make some sense of the situation, WBZ reporter David Wade went to the department of revenue to get some answers.

Commissioner of the Department of Revenue, Navjeet Bal says it's simple math and nothing more.

Wade: "On a one dollar item... you pay what in sales tax?

Bal: "Six cents."

Wade: "So we are rounding down until we have to round up?"

Bal: "Until we have to round up and we use general rounding rules."

In other words, anything less than .50 and you'll round down. On a dollar, 6.25 becomes 6.

On anything more than .50, you would round up. For example, on two dollars, the sales tax would be 12.5 cents. In this case the tax becomes 13 cents.

Pell is still suspicious though. He thinks that fraction tells the future.

Wade: "You think adding the .25 makes it that much closer to 7 and that much easier to get to 7 in the future.

Pell: "Come back and add three-quarters of a cent."

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