Thousands of bars and restaurants across the UK will slash their prices by 7.5% for Tax Equality Day on 20 September highlighting the benefits of a cut in VAT in the sector. Over 15,000 pubs and restaurants have agreed to cut their prices as part of a campaign for Tax Equality Day to show the effect of reducing VAT for the hospitality industry to 5 per cent.
At present, anyone dining, drinking in hotels, pubs, restaurants and bars pay 20 per cent on all their food and drink, while there is zero VAT on food in supermarkets. This annual event draws in customers tempted by the promise of cheaper food and drink and shows, in the best way possible, the positive effects of a lower rate of VAT for hospitality businesses.
Wetherspoon’s 900-plus UK pubs will cut the price of all food and drink by 7.5% on Tax Equality Day, as chairman calls on pub and restaurant operators to show their support.
Tim Martin has the backing of the Association of Licensed Multiple Operators and the British Beer and Pub Association, who are calling on their members to join in too.
‘Pubs suffer a huge disadvantage paying about 16 pence in business rates per pint versus about two pence for supermarkets,’ Martin said. ‘In addition there is a huge VAT inequality and unfairness.
‘A reduction in the level of VAT on a long-term basis will create a level playing field and generate growth and jobs in an important and vital industry – especially in beleaguered high streets.’
Martin said he is aiming to make it the busiest day of the entire year in his pubs and would urge other pub and restaurant operators to participate too.
‘Tax Equality Day is a great opportunity to shine a light on how unfair VAT is for both pubs and the wider hospitality sector,’ British Beer & Pub Association chief executive, Brigid Simmonds, added.
‘If you buy a meal in a supermarket you pay no VAT, but in the pub you pay 20%. Even a small drop in the VAT rate for eating out, to 15 per cent, would create 78,000 jobs and would be a big boost for the economy. I hope pubs will get behind the campaign.’
Speaking to CLH News earlier this year Kate Nicholls Chief Executive of the Association of Licensed Multiple Retailers (ALMR) said; “ The ALMR has been leading the campaign for a reduced rate of VAT, a tax which is disproportionately hampering investment and growth in the eating and drinking out sector, particularly when compared with supermarkets.
Pubs and restaurants in the UK pay the standard 20% rate of VAT on their food and drink, whereas supermarkets do not. The enormous savings being made by supermarkets in this area allows them to sell, among other things, heavily discounted alcohol at very near the cost price in an exercise akin to loss leading. The eating and drinking out sector is the third largest private sector employer the UK, with pubs and restaurants generating £60bn, but it is at a major disadvantage when it comes to VAT.”
She added “Given the associated uproar that would likely follow such a move, it is incredibly unlikely that any government is going to begin applying VAT to supermarket groceries. But there is certainly a chance to convince decision-makers that a reduced rate of VAT for eating and drinking out would be beneficial for the UK and the ALMR has been working with its European partners at HOTREC to put our message across.”