Tim Martin has launched a broadside against the Labour government’s tax policy, warning that rising costs risk stoking inflation and punishing businesses like his.
The outspoken chairman of JD Wetherspoon PLC (LSE:JDW), known for his plain speaking and occasional controversy, said the pub group was facing an extra £60 million a year from higher national insurance and minimum wage rates alone, on top of £7 million in energy costs and a new packaging levy.
“The recently introduced ‘Extended Producer Responsibility’ tax, a levy on packaging, will cost £2.4 million in the current year, an increase of £1.6 million,” he said. “Cost increases such as these will undoubtedly add to underlying inflation in the UK economy.”
Martin, a vocal critic of what he sees as unfair treatment of pubs compared to supermarkets, said tax breaks available to retailers were distorting the playing field.
He added: “Sensible policies in both these areas [tax and public health] are essential for the future well-being of the hospitality industry.”
His comments came as Wetherspoons reported a 10.1% rise in annual profit before tax, to £81.4 million, on revenue of £2.13 billion.
Like-for-like sales, which strip out the effect of new pub openings, were up 5.1% on last year. The company maintained its dividend at 12p a share.
Free cash flow surged by nearly 80% to 47.3p per share, while earnings per share rose to 50.8p. Including one-off items, such as property disposals, profit before tax jumped 47.4% to £89.3 million.
Wetherspoons also said it had outperformed the wider hospitality sector for 36 consecutive months.
In the nine weeks to the end of September, like-for-like sales rose 3.2%, compared with 0.5% for the industry as a whole, according to the CGA RSM tracker.
Martin took the opportunity to trumpet Wetherspoons’ tax contribution, claiming the company, its staff and its customers generated £838 million in tax last year, around £1 in every £1,000 collected by HM Revenue & Customs.
“In other words,” he said, “the country only needs about one thousand companies like Wetherspoon and no one else would have to pay any taxes at all.”
While he struck a generally upbeat tone, Martin warned that government-led cost increases “may have a bearing on the outcome” in the year ahead.