JD Wetherspoon PLC (LSE:JDW) chair Tim Martin has broken his four-day silence to offer some advice to Rishi Sunak, the chancellor of the exchequer.
Sunak is scheduled to make his Spring Statement tomorrow and that has prompted the opinionated founder of ‘Spoons to criticise the government’s proposed increase of value-added tax to 20% on food sold in pubs, restaurants and cafes in April.
The discrepancy in the tax treatment between pubs and supermarkets is a familiar theme for Martin and he was banging on about it again today.
"It doesn't make economic sense that food bought in pubs, restaurants and cafes attracts VAT of 20% when food is VAT-free in supermarkets,” Martin claimed.
"Pubs, restaurants and cafes form integral parts of high streets, whereas supermarkets are often in edge-of-town or out-of-town locations.
"Favouring supermarkets over pubs is bad for high streets and town centres,” he claimed.
"It is also an accepted principle of taxation that it should be fair and equitable, treating businesses that sell similar products in a similar way. Tax discrimination creates economic distortions.
"Supermarkets have clearly used their favourable tax treatment to subsidise the price of beer, wine and spirits over recent decades,” Martin said.
According to the Office for National Statistics, the number of pubs in the UK in 2020 stood at 29,215, down from 34,635 in 2011. Of these, 19,375 were in urban areas – down from 23,460 in 2011 – and 9,840 were in rural areas (2011: 11,175).
Since 2020, the pub trade has been hit incredibly hard by lockdown restrictions imposed by the government in an attempt to stop the spread of Covid-19.
A year ago, the Market Recovery Monitor from CGA and AlixPartners revealed that since December 2019, around 12,000 bars, pubs and restaurants have closed in Britain, equivalent to around 30 a day.
@RishiSunak, meet Selim, Nina, Sunny and Florence. They work in the UK’s world-leading hospitality & tourism sector, and they’re calling for a permanent low rate of VAT for our sector #VATsEnough pic.twitter.com/B6ObiAJUKe
— UKHospitality #VATsENOUGH (@UKHofficial) March 16, 2022
Meanwhile, trade body UKHospitality estimated that takings in pubs, bars and restaurants were down by 60% on 2019 levels in the week leading up to Christmas 2021.
Even Tesco seemed to have sympathy for Britain’s beleaguered pubs, running a campaign in April of last year exhorting its customers to pop down to their local boozer “if you can”.
Well played @Tesco. Brilliant marketing. #ukhospitality #hospitalityindustry #PubsReopening pic.twitter.com/D1MKff5hRe
— Hicham Felter. ???????????????????????????????????? (@hpfelter) April 12, 2021
"Pubs, restaurants and cafes play an important role in the social fabric of the nation, as well as generating employment and vast amounts of taxes for the Treasury,” Martin went on.
"The hospitality industry understands that governments need tax - but there should be a sensible rebalancing so that all businesses selling similar products are treated in the same way,” he concluded.