A Covid Surcharge?

Published in El Pais, 29 May 2020

With lockdowns lifting more businesses are allowed to open which is a relief to many as they can get back to work. However, many are noticing their bill is a little more expensive due to an extra charge at the bottom of their bill often being called a “Covid Tax” and it has led to a mixed response.

On the surface of course this does not look great. Consumers are accusing businesses of profiting off of a crisis and are taking advantage of them, equivalent to price gauging. Afterall many have lost their job or have had their hours cut back so they cannot afford to be nickel and dimed.

For their part, businesses are claiming they have no choice as while their business is open it is certainly not back to normal. One restaurant claimed their suppliers have increased their prices and they simply have no choice but to pass this off to their customers. Others say the way they do business itself makes things more expensive, a hair salon said they can only operate at half capacity and the use of personal protective equipment increases their cost so they started to charge a temporary tax. Many are simply giving consumers a choice like another salon charging clients $2 for a mask should they not bring their own.

While an extra surcharge is obviously not welcomed, we should not be so quick to judge. Charging a temporary surcharge might be better than the alternative. Many are saying prices should simply increase but the truth is once consumers are used to a price increase the retailers will have little reason to lower their prices to pre-pandemic levels even after their costs go down (if they in fact do) where as retailers will have a difficult time justifying a tax once everything is back to normal and will eliminate it.

Of course, time will tell which method angers consumers more and there will not be a solution where everyone is happy. The only thing we know for sure is that the old ways of doing business seem to be over.