The trade body said the Government had an opportunity at the Budget to unlock investment, skilled jobs and growth across communities, but warned thousands of pubs could close without a fairer tax deal.
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The survey found that, despite strong summer trading supported by good weather and major events, only one in three pubs made a profit, while 54% reported lower profits.
Across the full year from January to August, the position was worse, with only one in four pubs making a profit.
The BII said the biggest pressures facing operators were staff costs, energy and the limited ability to pass further cost increases on to customers.
Investment warning
The organisation said around 40p from every £1 spent in a pub went to the Treasury through taxation, describing the current burden as “unfair and unsustainable”.
The survey found 75% of publicans would invest in their pubs if taxes were reduced, while 62% would increase staff hours and one in two would spend more with local suppliers.
However, the BII warned one in five pubs expected to close if the cumulative tax burden remained the same, rising to two in five if taxes increased again.
The organisation said a fairer tax deal should prioritise a 10% VAT rate on all pub sales.
‘Back our pubs’
BII chief executive Steve Alton said: “Our latest member survey sends Government a very clear message. Pubs have enormous potential to deliver exactly what our economy needs, investment, employment and growth in every community.
“A fair tax deal, including 10% VAT on all pub sales, is vital to make this happen.
“But when around 40p from every £1 spent in a pub goes to the Treasury, the tax burden is unfair and unsustainable. It is choking the potential of good long-standing pub businesses to invest and grow.”
Alton said maintaining or increasing the current tax burden could mean “thousands of pubs lost from communities across the UK”.
He added: “Back our pubs and they will deliver in every postcode. Tax them harder and we will lose thousands.”
The comments come ahead of the Autumn Budget, with trade bodies and operators continuing to call for action on VAT, business rates and employment costs.
