'Curious' If 6.25% Sales Tax Will Round Up Or Down
We know it’s coming in just a month. A sales tax increase, taking us from 5 percent to 6.25 percent. It’ll be the first time our sales tax involves a fraction, and that has a lot of you Curious.
A “suspicious” Stuart in Medford went to our Curiosity Web site and asks:
“What’s the sales tax on a dollar? I assume 7 cents will be paid.”
And John in Dedham says:
“I’m curious if the state is going to begin minting 1/4 cent tokens. So will the state round up or round down?”
WBZ’s David Wade found out the answer.
“There’s going to be a tax of 6 and a quarter percent,” says John Pell, owner of the Pearson Machine Co. in Stoughton.
But since there’s no quarter penny, how do you pay the new 6.25 percent tax?
“Where does the rounding go, to 6 or 7 cents,” says Pell.
He’s among the curious. Bert in Norwood seems a bit of a conspiracy theorist. He went to our Curiosity Web site and wrote: “Retailers will round up!”
On the streets there’s confusion. When David asked one shopper what the sales tax would be on something that costs a dollar, the gentleman just looked puzzled.
A woman answered, “It’ll be 6.25 cents on a dollar.” But when we pointed out that there’s no .25 cent coin she added, “I don’t know what they’ll do then.”
Another man said he figured the state would round up to get more money out of us.
“It’s Massachusetts,” he said.
So what’s fact and what’s fiction when it comes to this fraction?
To make sense of it we went to the state Department of Revenue. The Commissioner of the D.O.R., Navjeet Bal, says it’s simple math, nothing more.
On a one dollar purchase you would pay 6 cents tax because the state will round down.
Bal says, “We use general rounding rules.”
What are general rounding rules? Well anything less than .50 you’ll round down. So on a dollar it would be 6.25, rounding down to 6 cents. Anything more than .50 you round up. So, $2 would be 12.5 cents tax, which would round up to 13 cents.
Still, John Pell is suspicious. He thinks the fraction tells the future, predicting that the state will “come back and add 3/4 of a cent.” In the meantime he’ll hold onto his 1/4 cent token.
The new, higher sales tax goes into effect on Aug. 1.
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