Currently, the law on food and drink allows supermarkets to sell food and drink with a 0% VAT rate, which naturally has a positive effect on those of us purchasing the goods, as well as on the supermarkets themselves. However, the same rules do not apply within pubs and restaurants, as they have to deal with the 20% tax rate. Pubs across the UK organised a Tax Equality Day on the 24th of September, whereby many operators sold their drinks with a reduced price of 7.5% to demonstrate the positive effect a drop in the VAT charged would have on the hospitality industry.
Taking part in the Tax Equality Day were a range of different pubs and restaurants, including the well-known and widespread British pub chain J D Wetherspoon. The chain, widely known as ‘Spoons, is a leading organisation within the attempt to raise awareness for the tax equality issue with over 900 pubs across the country giving it a great measure of leverage.
The campaign follows on from last year’s Tax Parity Day, which had a huge success with around 15,000 pubs and restaurants taking part, which overall helped to boost sales within these establishments by up to 20% in some cases. This helps to outline the possible advantages to business that a lower tax rate might help to bring for these food and drink establishments. Campaigners for the cut in VAT wish the VAT for pubs and restaurants to be cut down to 5% instead of the current 20%, their argument being that in these circumstances there would be more job opportunities and chance for an economic growth.
Amar Hall‘s Lee Slater said ‘The gorge in VAT rates between supermarkets and the hospitality industry is resulting in lost establishments and loss of jobs. The government needs to realise that the economy makes jobs and with a reduced VAT rate, cheaper prices will drive the economy forward.’
What are your thoughts on the Tax Equality Day campaign? Do you think it will work and lead to the Government lowering the tax or will this have no effect at all?