Seeking tax parity with supermarkets

By Tim Martin

- Last updated on GMT

Related tags: Vat club, Income tax

Martin: "Scare stories from Andrew Griffiths and the Treasury should be taken with a pinch of salt"
Martin: "Scare stories from Andrew Griffiths and the Treasury should be taken with a pinch of salt"
JD Wetherspoon chairman Tim Martin corrects some ‘misconceptions’ and lays out the arguments for a cut in VAT for the trade

It was surprising to read Burton MP Andrew Griffith’s view that no “Chancellor could give a tax break”, as proposed by the VAT Club “to any one industry”.

Of course, successive governments have already given a much bigger tax break to supermarkets, since they pay no VAT on food sales while pubs pay 20%. Indeed this government increased the tax break for supermarkets by putting up VAT for pub food from 17.5% to 20%, but kept supermarkets at zero.

So Mr Griffiths has misunderstood our case: what we are complaining about is the tax break which already exists for supermarkets. We feel, and we are confident that the public will agree, that their tax break is unfair. Tax parity, we say, should be created between supermarkets and pubs and this will increase government tax revenue and jobs.

The pub industry is important economically and socially for Britain, but 15% of our pubs have closed in 10 years, and pubs cannot be expected to compete in the light of this tax disparity — we are just asking for a level playing field.

Extra revenue

It is mischievous of the Treasury to state, in response to a question from Mr Griffiths, that the proposed tax cut will cost £11bn or £12bn each year.

Following the experience of France and the other countries that have reduced VAT for the hospitality industry, it can be demonstrated that 700,000 extra jobs are likely to be created, as well as extra Government revenue in areas such as corporation tax, PAYE and business rates. Reductions in state welfare payments and increased training are also by-products of these proposals.

Each £3 pint sold in a pub produces about £1 of tax and £1 of wages and almost all these benefits will remain if a VAT reduction is forthcoming. Supermarkets pay far less tax and create less jobs per pint, so how can it make sense to give them a tax break?

The French experience and common sense suggest that lowering VAT will increase jobs and Government revenue — “scare stories” from Mr Griffiths and the Treasury should be taken with a pinch of salt.

Public opinion

Mr Griffiths criticises the VAT Club campaign for not having the support of any MPs. Speaking for myself, I vociferously campaigned against the Euro for many years, but never once met any MPs to try and change their minds. The view of the anti-Euro team was that it was best to persuade the public first and that MPs would have to follow. This was necessary since the Prime Minister, the CBI, the Financial Times​ and most front bench MPs were in favour of joining.

We won over public opinion, which is always likely if you argue your case well and it makes sense, and I strongly believe that the VAT reduction makes sense for Britain and will win the day in the end.

Personally, I support the general objectives of the VAT Club but I’m not running it myself. I have never set any deadlines and I haven’t been involved in tactics. My objective has been to convince customers, employees and fellow publicans, but I haven’t lobbied any ministers and haven’t tried to run the campaign. I have left that to Jacques Borel and feel others should do the same.

Upset

Finally, let me correct one frequently-repeated misconception. Mr Griffiths has stated that I “briefed against” him in his constituency newspaper. This is untrue. What actually happened is that Mr Griffiths wrote an article in the PMA attacking the VAT Club campaign — fair enough, since debate is a good thing.

I wrote an article in the PMA in reply and sent both articles to the Burton Mail​ and have never spoken to anyone at that paper. The Burton Mail​, as good newspapers do, ran a story fairly reflecting both sides of the argument — this appears to have upset Mr Griffiths deeply.

I had never heard of Andrew Griffiths before I saw the article in the PMA and have still never met him. But it is wrong to refrain from debate on important issues on the basis that it might offend a politician. He was forthright in his criticism of the VAT Club and it was taken on the chin. He has to take my response on the chin.

We can’t afford to be pusillanimous in this debate. I believe the reason Mr Griffiths is so sensitive is because our arguments are so strong.

In conclusion, the VAT campaign has had more impact, in my view, than any campaign in my 34 years in the industry, thanks to the work of Mr Borel and the VAT Club. I also believe that most publicans have been won over, the case in favour of tax parity resonates with the public and public awareness of the issues is building.

I have no doubt that we will win in the end because our case is so strong.

As you would expect, there are a number of naysayers, malcontents and ostriches lobbing stones from the sidelines but, as they say on the camel trail, the dogs bark but the caravan moves on.   

Related topics: Legislation

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