Sales tax rise a pain in the cash register

Merchants rush to update systems by tomorrow

January 02, 2008|By Gadi Dechter | Gadi Dechter,SUN REPORTER

For Maryland consumers, tomorrow's 20 percent sales tax increase will mean a pinch in the wallet. For mini-market owner Sam Hamideh, the first sales tax increase since 1977 has been rather more afflictive.

"It's a pain," growled the owner of University Market and Deli in Charles Village, who must reprogram his electronic cash registers to calculate the tax increase from 5 percent to 6 percent. "I called my guy, and he already has 20 people before me. ... I cannot program those things."

Across the state, hundreds, perhaps thousands, of small businesses with commercial-grade registers have been flooding specialists with requests to rejigger the checkout machines.

To be sure, the cash register crisis of 2008 isn't exactly Y2K.

No one is in a panic that register glitches will fell planes and derail trains, as with the transition of computers to the new millennium. And many merchants aren't worried about the sales tax transition.

At the Johns Hopkins Barnes & Noble bookstore up the street from Hamideh, the new tax formula will be downloaded overnight into the store's computerized point-of-sale system, said assistant manager Janice Johnson. She won't have to enter a single keystroke.

Carma Halterman, co-owner of tiny Carma's Cafe nearby, isn't concerned about how to comply with the tax change.

"I've got a sexy little $150 register from Staples, and it comes with an owner's manual," she said. "I don't think it'll be a big deal."

But between the big-box behemoths and minuscule mom-and-pops are thousands of businesses with electronic registers that can be tricky to program.

"Each kind of register, depending on the model, uses a different algorithm" to calculate taxes, said Jeff McCann, owner of Maryland Cash Register Sales in Dundalk. "Businesses are going to need the tax program for their particular register."

Merchants are required to follow a tax rate chart sent last month to about 200,000 businesses by the state comptroller's office, which tells them how much tax to add depending on where in the dollar the price "breaks."

Consider a pack of gum.

If your favorite chicle-based confection costs from 41 cents to 60 cents, the tax to be applied under the old formula was 3 cents. Starting tomorrow, the 3-cent levy applies to gum that costs 34 cents to 50 cents. Chewing gum between 51 cents and 66 cents will now take a 4-cent tax.

Hamideh's register guy is Leonard Dernoga of Chesapeake Cash Register Sales in Crownsville, one of a handful of specialty vendors servicing small businesses in the region.

This week, Dernoga reprogrammed one of Hamideh's machines to compute the new 6 percent sales tax and left the other at 5 percent - to be taken care of after the tax increase goes into effect.

Other companies got a jump- start on register adjustments but apparently aren't holding off on passing the tax increase to consumers.

Jim Nolte, 51, went to buy a newspaper at the Royal Farms on Timonium Road yesterday morning and was told that the bill would be 80 cents, a penny more than usual.

The teller told him the store's registers had been reprogrammed overnight to reflect the tax increase and there was nothing she could do. An employee at the store yesterday confirmed the early change.

"I'm one of those funky people that even though it's a penny, it really irked me," said Nolte of Timonium.

Dernoga has been receiving dozens of calls for service every day. The upgrade takes minutes, and at $45 a pop, it's been a welcome boon for a micro-industry that has suffered from an increase in direct-to-consumer register models like the one Halterman uses.

"It'll be a good January," Dernoga said.

McCann said last week that he expected to perform several hundred register upgrades and predicted that some businesses would miss the Jan. 3 deadline.

He and Dernoga said the comptroller's sales tax bulletin came out too late to provide enough time for all businesses to get their machines in order.

The new tax was approved in November during the General Assembly's special session. It is part of a $1.3 billion package of revenue increases.

"I would have thought they would have given more time to people to get used to the idea of what they're going to need to be doing," McCann said.

Dernoga wishes the comptroller had given retailers more breathing room.

"I think a grace period of two weeks would have been appreciated by everyone involved," he said. "I can't be everywhere at one time."

Joseph Shapiro, a spokesman for Comptroller Peter Franchot, said the tax collection office knows merchants are "doing the best they can."

But if they're not up to speed electronically tomorrow, businesses should use the paper rate chart to manually compute the new taxes, he said.

That's what they've been doing for decades at Canton's Sip and Bite restaurant, which is why owner Tony Vasiliades was unfazed by the tax transition.

The Greek diner's popular gyros are rung up on a 50-year-old mechanical register - and servers calculate the sales tax in their heads.

Still, Vasiliades found a reason to gripe. "I'm not too happy about it," he said of the tax change. "Five percent was a much easier calculation."

gadi.dechter@baltsun.com

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