Prices are 7.5 per cent lower at JD Wetherspoon pubs today in protest against VAT

 
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The Crosse Keys is one of the pubs participating in today's price drop (Source: JD Wetherspoon/Gillian Evans)

Lunchtime punters might be surprised today to find prices slashed at their local Wetherspoon's.

The reason behind it is that JD Wetherspoon founder and chairman Tim Martin, in his eternal wisdom, has decided to lower prices for one day only in protest against the high tax burden on pubs.

All 900 Wetherspoon pubs across the country are today taking part in a price cut of 7.5 per cent to highlight the levy. In the City, that includes favourites Hamilton Hall and the Crosse Keys, which last week made it into CAMRA's annual guide to the best pubs in Britain.

All food and drink served in pubs is currently subject to 20 per cent VAT, which Wetherspoon's says is unfair, creating inequality between pubs and supermarkets.

"We are keen to highlight the amount which customers would save, if VAT in pubs were lowered permanently," said Martin.

He added: "A reduction in the level of VAT, on a long-term basis, will generate growth and create jobs in the important leisure and hospitality sector."

The chain is backed by trade bodies the Association of Licensed Multiple Retailers (ALMR) and the British Beer and Pub Association (BBPA) in its initiative.

Read more: Glass half empty: Sales at London's pubs and restaurants fell in August

Kate Nicholls, chief executive of ALMR, told City A.M. that the high rate of tax could threaten Britain's hospitality industry.

“In a week when Moody’s said rising costs and a softening of consumer confidence were resulting in an industry stress test, Tax Equality Day is a timely reminder of how much of that cost burden comes from tax and the boost which would come from targeted tax cuts," she said.

"Our latest Benchmarking Report shows that the chancellor’s decision to significantly increase pub taxes – business rates and alcohol duty – together with rising labour costs has pushed the amount the average pub pays in tax to just under 40 per cent.

"That threatens investment in jobs, growth and communities and places in jeopardy the sector’s record of generating 1 in 6 new jobs at a time when we can ill afford it. We know from past experience that a cut in VAT is the single most effective tool in staunching a consumer spending downturn in the face of rising inflation.”

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BBPA chief Brigid Simmonds agreed, saying: "Even a small drop in the VAT rate for eating out, to 15 per cent, would create 78,000 jobs, and would be a big boost for the economy.

"Lots of our competitor countries have taken action on VAT in the hospitality sector, and Britain should, too. When you add in business rates, and the huge rises we have seen in beer duty in the past decade, it all makes for an unsustainable tax burden on our pubs."

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