At present, all food and drink in pubs is subject to 20% VAT, compared to supermarkets, which benefit from a zero VAT rate on all food. As a result, supermarkets are able to use that saving to sell alcohol at a discounted rate.
JDW chairman Tim Martin outlined exactly what will happen on 20 September and how a reduction in VAT could create jobs and generate growth in the trade.
Permanently lowering prices
He said: “We are proud to support the campaign to reduce the level of VAT within the pub industry. Customers coming to our pubs on Wednesday 20 September will find the price of their food and drink is lower than normal.
“We are keen to highlight the amount customers would save if VAT in pubs was lowered permanently.
“For example, the total price of a meal and drinks for a customer would be reduced from £10 to £9.25 on Tax Equality Day.
“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.”
He added: “Creating tax equality between pubs, restaurants and supermarkets will fulfil many Government objectives including the creation of more jobs. It is a win-win situation for the Government and our industry.”
Association of Licensed Multiple Retailers chief executive Kate Nicholls lauded the opportunity Tax Equality Day can bring to pubs.
She said: “It is a great opportunity for venues to communicate the issues of VAT to their customers. People working within the eating and drinking out sector understand the cost burdens being placed on venues and the massive disparity compared to other sectors that do not have to pay the tax.
“A one-day drop in prices can be a great way to show the scale of the problem to customers and to get out the message to the Government – a lower rate of VAT for eating and drinking-out venues means more opportunity to invest in jobs and growth.”
British Beer & Pub Association chief executive Brigid Simmonds also back ed the campaign. She said: “Tax equality day is a great opportunity to shine a light on how unfair VAT is for both pubs and the wider hospitality sector. If you buy a meal in a supermarket you pay no VAT, but in the pub you pay 20%. Even a small drop in the VAT rate for eating out, to 15%, would create 78,000 jobs, and would be a big boost for the economy. I hope pubs will get behind the campaign.”