An estimated 15,000 UK pubs, bars, and restaurants slashed their prices by 7.5 percent on September 24, as part of lobbying efforts to secure a lower value-added tax (VAT) rate for the hospitality sector.
“Tax Equality Day” was organized by the VAT Club Jacques Borel, a campaign group which claims that lower VAT rates would help to stimulate the creation of new businesses and jobs. A similar event was held in 2013, when more than 40 leading businesses cut their prices – also by 7.5 percent – in line with the estimated benefit to consumers of a cut to the VAT rate from 20 percent to 5 percent.
The campaign has been vocal in its condemnation of current VAT rules, which subject all food and drink served in pubs to a 20 percent VAT rate, while sales by supermarkets receive concessionary treatment.
Earlier this month, Tim Martin, chairman of pub chain JD Wetherspoons described the VAT disparity between supermarkets and pubs as “the biggest danger to the pub industry.” According to Wetherspoons’ 2014 annual report, “this disparity enables supermarkets to subsidize their alcoholic sales to the detriment of pubs and, indeed, restaurants … the pub industry has lost approximately 50 percent of its beer sales to supermarkets since VAT was increased from 8 percent over 30 years ago.”