Wetherspoon’s is slashing prices across nearly 900 pubs in the UK to protest against tax discrepancies that allow supermarkets to undercut pubs on alcohol sales.
The one-day promotion – dubbed Tax Equality Day by the chain – sees food and drink prices across 830 pubs in England, Wales and Northern Ireland drop by 7.5% on Wednesday.
Nearly 70 Wetherspoon’s pubs in Scotland will take part in the same price cuts – barring alcohol, which faces local restrictions on promotional sales.
It is the second Tax Equality Day led by Wetherspoon’s – after the first in 2014 – and is meant to demonstrate how a reduction in value added tax (VAT) would benefit the hospitality industry.
While UK pubs are currently hit with a 20% tax for all food and drink, supermarkets pay 0% VAT on food, allowing them to use those savings to sell alcohol as a discounted rate, JD Wetherspoon explained in its release.
Wetherspoon’s chairman Tim Martin said: “We are keen to highlight the amount which customers would save if VAT in pubs were lowered permanently.”
Proponents of the change say an industry-wide VAT cut would boost demand, increase revenues, and put employers in a position to continue investing in pubs, restaurants and employees.
The British Beer & Pub Association, which has backed the initiative, estimates that 78,000 new bar and restaurant jobs could be created if VAT was cut from 20% to 15%.
“Creating tax equality among pubs, restaurants and supermarkets will fulfil many government objectives,” Mr Martin said.
“It will create more jobs and raise the amount of taxes which the Government receives, since pubs and restaurants pay more taxes and create more jobs than supermarkets do.
“It is a win-win situation for the Government and our industry.”
Industry bodies have backed JD Wetherspoons’ call for a cut in VAT (PA)
The Association of Licensed Multiple Retailers (ALMR) is also calling for a VAT reduction for businesses in the hospitality industry, which it said generates £60 billion per year for the UK economy.
It said a tax cut would provide support while Britain adapts to Brexit.
“Brexit has thrown up a considerable amount of uncertainty for businesses, but there is an opportunity for us to secure a more favourable rate of VAT for the hard-working businesses we represent,” ALMR chief executive Kate Nicholls said.
JD Wetherspoon last week reported a 4.1% jump in revenue to £1.66 billion in the year to July 30, while profits rose 27.6% to £102.8 million.
But Brexit-backing chairman Mr Martin used the company’s statements to accuse the EU of bullying the UK.
“As a result of their current posturing and threats, EU negotiators are inevitably encouraging importers like Wetherspoon to look elsewhere for supplies.
“This process is unlikely to have adverse effects on the UK economy, as companies will be able to switch to suppliers representing the 93% of the world’s population which is not in the EU, but this evolution will eventually be highly damaging to the economy of the EU.”