JDW slashes prices to highlight VAT cut benefit

By Nikkie Thatcher

- Last updated on GMT

Equality needed: 'it doesn't make sense for the hospitality industry to subsidise supermarkets,' JD Wetherspoon boss Tim Martin says (image: Getty/Image Source)
Equality needed: 'it doesn't make sense for the hospitality industry to subsidise supermarkets,' JD Wetherspoon boss Tim Martin says (image: Getty/Image Source)

Related tags Food Jd wetherspoon Legislation Pubco + head office

Pub behemoth JD Wetherspoon (JDW) is cutting prices on its food and drink for one day to spotlight the benefit a permanent VAT decrease would have on the hospitality sector.

On Thursday 15 September, prices at the firm’s 851 (excluding the Republic of Ireland) will be reduced by 7.5% to mark Tax Equality Day.

In Scotland, prices will be reduced on meals and non-alcoholic drinks only due to licensing restrictions.

JDW estimated a customer spending £10 on food and drink will only pay £9.25 on the day later this month.

It compared supermarkets paying zero VAT on food to pubs paying 20%, stating the saving for the off-trade meant it could sell alcohol to its customers at a discounted price.

Fair and equitable

JDW chairman Tim Martin said: “Taxes should be fair and equitable. It doesn’t make sense for the hospitality industry to subsidise supermarkets.

“However, it is unfair supermarkets pay zero VAT on food but pubs and restaurants pay 20%. Pubs have been under fantastic pressure for decades due to the tax disadvantages they have with supermarkets.

“Customers in our pubs will find the price of their food and drink will be lower than normal on Tax Equality Day.”

The pub group boss lauded previous tax reductions during the pandemic when the level of VAT was reduced for parts of hospitality.

“We applaud the Chancellor when he reduced the level of VAT to 5% and then to 12.5% (for food and drink served in pubs) and urge the Chancellor once again to reduce VAT, thereby creating tax equality between pubs and supermarkets,” Martin added.

“He should also note the main impact of tax inequality is on high streets and town and city centres, which heavily depend on a diversity of prosperous hospitality businesses for economic, social and employment success.

“[The] Government does best when it does not discriminate among various types of business selling the same products.”

Survive and thrive

Martin has repeatedly called for an equal playing field when it comes to VAT in the on and off-trade.

Just last month (August), he said tax equality with supermarkets was needed​ in order for pubs to “survive and thrive in the future”.

In its publication Wetherspoon News ​in June, the company outlined in the 12 months to July 2019, it generated £764.4m in tax​, equating to about £1 in every £1,000 of all UK Government taxes.

It also estimated the average tax generated per JDW pub during the course of 2019 was more than a quarter of a million pounds (£871,000).

In the financial year to July 2020, when the on-trade was shut for prolonged periods and the firm made a substantial loss, £436.7m of taxes were generated, net of furlough payments.

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