On Thursday 23rd September, JD Wetherspoon plans to reduce the price of all food and drinks by 7.5% across all of its pubs in England on what it is calling ‘Tax Equality Day’
The aim is to highlight the benefit of a permanent VAT reduction in the hospitality industry.
Currently all pub food and drinks are subject to 5% VAT as a result of the VAT cut by the Chancellor in July 2020.
The reduced 5% VAT for the hospitality industry is set to stop on 1 October 2021 when the VAT rate will rise to 12.5%. It is then planned to return in stages reaching 20% by 2022.
In comparison, supermarkets pay zero VAT on food and can use that saving to sell alcohol to customers at a discounted rate.
Wetherspoon’s chairman Tim Martin said: “Taxes should be fair and equitable. However, it is unfair that supermarkets pay zero VAT on food, but pubs and restaurants, in normal circumstances, pay 20%.
“Pubs have been under fantastic pressure for decades, owing to the tax disadvantages which they have with supermarkets. Customers in our pubs on Tax Equality Day will find that the price of their food and drinks will be lower than normal.
“However, as a result of the VAT increase to 12.5%, we will have to increase food prices by around 50p per meal. We urge the Chancellor to create tax equality between pubs and supermarkets by making permanent the current VAT regime for pubs.
“He should note that the main impact of tax inequality is on high streets and town and city centres, which depend heavily on a diversity of prosperous hospitality businesses for economic, social and employment success.”