cost

It was never theirs to collect in the first place, so now they project the lack of an illegal means of taxing, as a 'cost'? A cost to whom? At the moment the tax is a cost to the people working at the coal-face. Relieving them of that cost would benefit them infinitely more than the stupid treasury.

Tips are gifts from grateful customers. If a waitron (LOL genderless language, just to trigger) is a lovely person and efficient, then they deserve more than an sullen, grumpy, sloppy one. So, by taxing tips, we are now basically taxing the value of communication and excellent service skills? In other words, the better a person is at their job, the more the grabbers will tax them.

Conversely, the practice of tip-taxation arguably incentivises bad service, as less tax will be paid if one collects less. A recipe for laziness if one thinks about it.

It's a scandal. Imagine going after taxing gifts. Oh wait.

Just to add a cherry on top: the service industry pays a dismal wage. This means that tips encourage staff to perform well and render efficient service to the customers themselves, despite what they would otherwise be paid. What is one to do about that? The customers choose who they want to be served by, thereby providing valuable information: These people are well-tipped - in other words: Keep them if you want the business to succeed. Perhaps they need a raise as well, so that the government can get some. Or perhaps not. You choose.

Tips should not be taxed. end of.