EC to rule on lower pub food VAT

VAT on food and beer sold in pubs could be as low as five per cent if the Campaign for Real Ale (CAMRA) gets its way.

Members of the organisation, including chief executive Mike Benner and head of policy and public affairs Jonathan Mail recently discussed the issue with representatives of the European Commission (EC).

The EC is already considering dropping the VAT payable on food in restaurants and pubs to as low as five per cent and CAMRA is attempting to make sure the low rate applies to beer as well.

Several countries in Europe - including Ireland, Greece and the Netherlands - already have the five per cent rate on food and if the plan is approved by the EC it will be down to the UK government to decide whether to implement it or not.

Mail said: "Reducing the VAT on meals to five per cent would be a big boost to restaurants and pubs selling food.

"CAMRA has met with representatives of the European Commission to discuss whether it could also be applied to beer sold in pubs and restaurants."

He added: "Given the current economic growth and rates of unemployment I think it is something that would be considered."

The move has been backed by John Grogan MP, chairman of the All-Party Parliamentary Beer Group.

He said: "In the case of beer it is a much longer term campaign, but the reduced rate for food could happen this year.

"It would be a big boost to pubs who are already trying to sell credit crunch meals and getting rid of a big slice of VAT would help with that."

In the pre-Budget Report in November Alistair Darling cut VAT from 17.5 per cent to 15 per cent but any benefits to the trade were offset by another eight per cent rise in alcohol duty.

VAT is set to revert to 17.5 per cent at the end of the year.