Hospitality Sector Faces ‘Heartbreaking’ Struggle Amidst High VAT Rates
Pub owners across Birmingham are issuing a stark warning to the government, stating that current Value Added Tax (VAT) rates are critically undermining the viability of the hospitality sector. Businesses are contending with a 20 percent VAT on all food and drink sales, a stark contrast to the zero VAT applied to food items sold in supermarkets. This disparity, operators argue, provides supermarkets with a significant financial advantage, enabling them to offer alcohol at substantially discounted prices.
Concerns about the disproportionate VAT burden on hospitality have been a recurring issue. When questioned last August regarding potential government action on this matter, West Midlands Mayor Richard Parker acknowledged the public’s awareness of supermarket alcohol prices. However, he expressed uncertainty about the government’s willingness to address these specific concerns within the hospitality trade.
‘Cutting the Oxygen Off’ for Businesses
The Station pub in Kings Heath has voiced its deep concern, describing the current VAT levels as a factor driving the hospitality industry towards closure. In a social media statement, the establishment characterized the situation as a ‘heartbreaking’ period for the sector.
The pub’s statement detailed the immense pressures faced by businesses:
- Businesses are being ‘squeezed in every direction.’
- A 20 percent VAT on every sale is forcing numerous businesses out of operation.
- This is compounded by other rising costs, including wholesale food and drink prices, business rates, beer duty, employment charges, and energy expenses.
- Operators describe the current economic climate as the ‘worst I’ve ever seen it.’
The Station also highlighted the broader impact, suggesting that retail and the hair and beauty industries are equally in need of a VAT reduction. The pub argued that the current VAT structure is ‘cutting the oxygen off’ for a vast number of businesses, both large and small.
Emphasizing the importance of fair taxation, the pub stated:
“I’m a great believer in paying taxes as it taxes that build the fair and just society we all want to live in However they have to be fair and proportional. VAT at 20 per cent is neither fair or proportional in the current economic landscape. Its a lazy tax that kills enterprise, jobs and hope for so many.
Young people are desperate for work but the government has made it so tough because so many hospitality businesses are closing or cutting back.
Please don’t tell me we can’t afford it, the money governments waste and burn every day is outrageous. They do this off the back of businesses across the country working so hard yet often just surviving. If you love your local pub, or a coffee at your favourite café or a meal at your favourite restaurant, please help them and share this so we can spread the message. Less VAT more hope. Less VAT more jobs. Less VAT More beer. Thank you.”
Call for a 10 Percent VAT Rate
Similar sentiments have been echoed by The Dark Horse pub in Moseley, which is advocating for a reduction in the hospitality VAT rate to ten percent.
Through social media, The Dark Horse presented its case:
“VAT’s the problem. Do you want to back your favourite venue, help your high street and support local jobs? Then sign our petition to lower the rate of VAT for hospitality to ten per cent. Our pubs, restaurants, cafes, hotels, nightclubs and many more, are at the heart of our communities. They bring people together and bring life to our cities, towns and villages, but they’re under huge pressure from rising costs. In the UK, you pay one of the highest VAT rates in Europe. Twenty per cent extra in VAT for your pint, meal out or stay away. In France, Spain and Italy, it’s ten per cent. In Germany? Seven per cent. Our message to Government is simple. Let’s stand together to say VAT at ten per cent is fair for hospitality.”
The campaign highlights that the UK’s 20 percent VAT rate for hospitality is significantly higher than in several European counterparts, including France, Spain, and Italy, where the rate stands at 10 percent, and Germany at 7 percent. Operators believe that aligning the UK’s VAT rate with these nations would provide much-needed relief and foster a more sustainable environment for the sector.
