Wetherspoons warns of meals price hike if VAT increases

Wetherspoons warns of meals price hike if VAT increases

Wetherspoons has hit out at government plans to row back a VAT cut for the hospitality industry, claiming it will have to put up the price of food in its pubs by around 40p if the tax break is not extended.

The tax on food served in pubs was cut from 20% to 5% when the pandemic hit, but it is set to rise to 12.5% in September and return to normal levels in stages over next year.

Wetherspoons, which is known for its cheap drinks and meal offers, said on Wednesday, July 7, that the staged increase would “make the entire hospitality industry less competitive vis-à-vis powerful supermarkets”, which pay no VAT on food.

“One area of undoubted unfairness, which creates economic distortions, relates to VAT. Supermarkets pay zero VAT on food, but pubs and restaurants pay 20%, in normal circumstances,” a spokesman for the 860-strong pub chain said.

Wetherspoon boss Tim Martin is expanding his pub empire

“It is an important principle of taxation that taxes should be fair and equitable,” Wetherspoons said, adding that its own price rises would come in from September.

The UK pub group accused the government of acting like a television character, saying: “For many years, UK governments have therefore behaved like Monty Python’s Dennis Moore — who robbed the poor (in this case pubs and restaurants) to help the rich (supermarkets)”.

“Treating the same product — food — the same way for tax purposes makes economic sense,” it added.

Wetherspoons said that despite restrictions easing, its sales were down 14.6% between 17 May to 4 July, when pubs were fully open again.

In March, it reported a record pre-tax loss of £46.2m in the six months to the end of January and blamed the UK’s pandemic policy for causing “economic and social mayhem and colossal debts”

Despite this, the pub chain has opened two new pubs in the past six months and had 18 more in the pipeline.

Once current projects are completed it plans to invest around £750m on opening or enlarging pubs “which may result in the creation of about 20,000 jobs”.

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