In recent years the pub industry in the UK has struggled greatly, with a number of local businesses forced to close thanks to falling profits. Groups such as the Campaign for Real Ale (CAMRA) have largely blamed this phenomenon on the government, claiming that high beer taxes have allowed supermarkets to price out more traditional licensed premises.
Now it appears that the pub industry is preparing to fight back, with a number of large chains joining a protest designed to cut the level of value added tax levied across the hospitality sector. At present, this stands at 20 per cent, but the overall aim of protest organiser The VAT Club JB is to lower this to 5 per cent.
Pub chains such as Brains, Heineken and Punch Taverns will join forces with family brewers Fuller’s and St Austell on Wednesday 25th September, otherwise known as Tax Parity Day, by cutting their prices by 7.5 per cent. Food retailers Pizza Hut and Subway will also be participating in the scheme.
Chairman of The Independent Family Brewers of Britain, James Staughton, believes the campaign will serve as a wake-up call to the government whilst simultaneously demonstrating the social benefits of a drop in VAT across the hospitality industry.
He says; “Pubs have suffered due to the VAT increase in January 2011 to 20 per cent with many pub-goers opting to stay at home – pubs are beleaguered with tax and legislation.
“This campaign is to kick start some economic growth and help landlords get their businesses and communities into growth.
“Reducing VAT will help to regenerate high streets and will particularly help youth unemployment as pubs take on junior help.”
At present, pubs are heavily struggling to compete with supermarkets which have a zero VAT rate and can therefore afford to charge less for alcoholic beverages. This has meant that, although the combined annual turnover of pubs and bars country-wide equals over £21 billion, the average pub pays just under half its annual turnover in taxes as well as suffering from a 13 per cent rise in legislative controls when compared to a decade ago.
Head of The VAT Club JB, entrepreneur Jacques Borel, knows first-hand the damaging effect this can have on a business as he owns and operates 1,042 restaurants and 35 hotels across Europe. He has already successfully campaigned for VAT reductions in countries such as France, Germany and Sweden, and now hopes the UK will follow suit.
Mr Borel believes that pubs will benefit from a 10 to 12 per cent sales boost next Wednesday thanks to the lower prices on offer.
He says; “A reduction in the level of VAT, on a long-term basis, will generate growth and create jobs in the important leisure and hospitality sector.
“This is going to be an incredible driver of sales.
“You have to remember that these guys are not heroes; they are businessmen – they know that reducing VAT will bring in more custom.”
Do you think the recovery of the pub industry depends hugely on the government reducing VAT levels, or will you be heading to your nearest participating pub on Wednesday to form your opinion then?
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