Bars and pubs to cut prices to support Tax Equality Day

Pint Shop Cambridge

Pubs and bars are set to support Tax Equality Day on September 24 by cutting the price of food and drink as part of the campaign for lower VAT on food and drink in the on-trade.

At all 69 sites operated by managed pub and bar operator TCG around the UK, the price of food and drink will be reduced by 7.5% for the day.

TCG, which supported the first Tax Parity Day last September, is supporting it with posters, leaflets and staff in all pubs and bars explaining the campaign to customers.

The aim is to raise awareness of the high rate of VAT paid on food and drink in pubs compared to the near-zero rate paid by supermarkets.

TCG chief operating officer Nigel Wright said: “The current 20% VAT rate continues to hit the hospitality industry hard. By taking part in Tax Equality Day, we’re able to take the key messages about the VAT campaign to customers across our diverse estate, from our world-famous Tattershall Castle floating pub on the Thames to city centre bars and local pubs.

“Our industry is a large employer, particularly of young people, and a major contributor to the Treasury. We think it’s fair to ask the Government to show support for pubs and bars, especially since projections show the cut in VAT revenue would be balanced by increased taxes generated by higher levels of trade and more jobs in the sector.”

The campaign, which is spearheaded by Jacques Borel’s VAT Club, is aiming to convince the government that the VAT rate in the hospitality should be reduced from 20% to 5%. Last year, around 1,500 pubs and bars took part.

Cambridge bar Pint Shop (pictured) will lower the prices of all its food and drink by 15% on the day to show the effect a VAT reduction would have on prices.

Richard Holmes, co-owner of Pint Shop, said: “We strongly believe that the level of VAT paid by customers at restaurants, pubs, bars and hotels should be cut in order to encourage a more level playing field between the retail industry and the hospitality industry.

“We see the VAT rate as one of the biggest challenges faced by pubs today, as customers pay far more than they would at the supermarket, making it less of an incentive to support their local.”

David Campbell, head of restaurants and bars at business advisory group BDO, said: “The UK tourism industry contributes over £115billion in direct and indirect spending and employs around 10% of our national workforce, over 2.7million people. It is a vibrant hub of restaurant concepts and cuisines and is internationally regarded as a world leader in gastronomic excellence.

“However, as one of only four EU member states who do not have a reduced VAT rate for tourism, there is a risk to competitiveness as a destination for foreign tourists as well as domestic customers – a point that Jacques Borel’s Tax Equality Day is campaigning for.

“Anything that can be done to protect the industry is important, especially if, as research suggests, it can be done in a tax-neutral way for the Treasury. A reduction in the VAT rate to 5% for the industry would generate growth in the hospitality sector, including jobs, but would also encourage competitiveness within Europe and rest of the world.

“Moreover, including pubs and restaurants within the reduction would ensure a comparability of prices between supermarkets and eating out destinations.”

Updated September 24, 2014 with BDO comment

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