Pub operator JD Wetherspoon is to cut the price of all food and drink in its pubs by 7.5% on Thursday September 23, to highlight the benefit of a permanent VAT reduction in the hospitality industry.
Prices at the company’s 862 pubs (not including Republic of Ireland) will be reduced for one day only to mark Tax Equality Day.
At present all food and drink in pubs is subject to 5% VAT as a result of the VAT cut by the Chancellor in July 2020. This will change on Friday 1 October, when the VAT rate will rise to 12.5%, with the government’s aim of returning VAT to 20%, in stages, in 2022.
By comparison, supermarkets pay zero VAT on food, and are able to use that saving to sell alcohol to its customers at a discounted price.
Chairman Tim Martin said, “ Taxes should be fair and equitable. However, it is unfair that supermarkets pay zero VAT on food, but pubs and restaurants, in normal circumstances, pay 20 per cent.
“Pubs have been under fantastic pressure for decades due to the tax disadvantages that they have with supermarkets.
“Customers in our pubs will find the price of their food and drink will be lower than normal on Tax Equality Day. However, as a result of the VAT increase to 12.5 per cent on October 1, we will have to increase food prices. Therefore, on Wednesday September 29, we will increase prices on our meals by 50p.
“We urge the Chancellor to create tax equality between pubs and supermarkets by making the current VAT regime for pubs permanent.
“He should note that the main impact of tax inequality is on high streets and town and city centres, which heavily depend on a diversity of prosperous hospitality businesses for economic, social and employment success.”