THE founder and chairman of JD Wetherspoon has attacked the UK Government for returning value-added tax to 20 per cent for the hospitality sector.
VAT will be restored to its usual rate for the industry from April after being reduced under measures to support hospitality through the pandemic.
The rate of VAT applied to hospitality activity had been cut to as low as 5% in the early months of the pandemic in 2020. It remained at 5% until September 30 last year, when it was increased to 12.5%. Now it is set revert to 20% from April 1.
However, hospitality campaigners have argued consistently that the rate should remain at 12.5% to help the industry combat rising costs, including soaring fuel bills and steep wage inflation prompted by an acute shortage of staff since Brexit.
Wetherspoon chief Tim Martin argues today that it “doesn’t make economic sense that food bought in pubs, restaurants and cafes attracts VAT of 20%, when food is VAT-free in supermarkets.”
Mr Martin said: “Pubs, restaurants and cafes form integral parts of high streets, whereas supermarkets are often in edge-of-town or out-of-town locations.
“Favouring supermarkets over pubs is bad for high streets and town centres.
“It is also an accepted principle of taxation that it should be fair and equitable, treating businesses that sell similar products in a similar way. Tax discrimination creates economic distortions. Supermarkets have clearly used their favourable tax treatment to subsidise the price of beer, wine and spirts over recent decades.
“Pubs, restaurants and cafes play an important role in the social fabric of the nation, as well as generating employment and vast amounts of taxes for the Treasury.
“The hospitality industry understands that governments need tax – but there should be a sensible rebalancing, so that all businesses selling similar products are treated in the same way.”
On Friday, Wetherspoon reported that trading was showing signs of improvement since Covid restrictions began to be eased in February following the outbreak of the Omicron variant.
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