J D Wetherspoon chairman, Tim Martin has called on the government to fix the tax disparity between
supermarkets and pubs.
In a statement issued at the company’s preliminary results this morning, Martin said this week’s Budget business rates concession for pubs is dwarfed by tax and regulatory increases.
He said the company’s costs are set to rise by £20m in the next year. The figure includes an additional £7m in business rates, a £4m rise in electricity costs, £7m in excise duty and £2m for the new apprenticeship Levy.
'The biggest danger to the pub industry is the continuing tax disparity between supermarkets and pubs, in respect of VAT and business rates,' he said.
'As previously indicated, we understand the need for the Government to raise taxes. However, there should be a sensible rebalancing of the taxes paid by pubs and supermarkets, if the pub industry is to survive in the long term.
'Last Wednesday’s Budget was presented by the chancellor as providing tax relief of approximately £1,000 per pub, for pubs with a rateable value of less than £100,000. In fact, that sum is dwarfed by tax and regulatory increases.'
Martin added that 'upon examination of the fine print of the Budget', the company is not eligible for the £1,000 per annum business rates cut. He said the proposed sugar tax will cost the company £4m from April 2018, as well as further electricity related fee increases totalling £5m by 2020.
For the 26 weeks ended 22 January 2017 like-for-like sales increased by 3.3%, operating profit was up 31.7% after exceptional items to £65.1m. In the six weeks to 5 March 2017, like-for-like sales increased by 2.7%, however total sales decreased by 0.2%.
The company said it intends to increase the level of capital investment in its existing pubs from £34m in 2015/6 to around £60m in the current year. However, it said it expects like-for-like sales to be lower in the next six months, due to what it said will be significantly higher costs in the second half of the financial year.