JD Wetherspoon chairman Tim Martin has spoken out about the tax burden facing pubs, identifying three areas where the trade is over-taxed and regulated.
The living wage, business rates and VAT make up the major disparities between the costs to the on-trade, compared to those that supermarkets pay, he said. Martin called for pub operators to familiarise themselves with the burden on pubs and for the industry to 'increase our personal efforts in highlighting the maths of pub taxes for the benefit of the public, as well as for politicians'.
'It's far from certain that the majority of people in our industry really comprehend the true extent of our tax and regulatory burden,' he said. 'Pubs have lost over 50% of their drinks sales to supermarkets in the last 30 years and are continuing to lose trade at an alarming rate, mainly as a result of these economic realities.'
Speaking on the imbalance of costs, he said the most topical relates to the 'so-called living wage – which is really, of course, the new minimum wage'. Martin estimates that an average pub pint costs £3 before VAT, with around 90p of that accounted for by staff costs, compared to around 10p labour costs for supermarkets, which charge as low as a £1 per pint.
Supermarkets pay almost no VAT in respect of food sales, whereas pubs pay 20%, a massive tax inequality which helps supermarkets to subsidise their alcoholic drinks prices
'You don't have to be Milton Friedman to work out that minimum wage initiatives by governments hit the pub trade nine or 10 times harder than supermarkets, as a result,' said Martin.
Regarding business rates, he said pubs pay more than 13 times the business rates charge per pint in supermarkets. 'This disparity is unsustainable and makes no economic sense.'
'The third and greatest disparity relates to VAT,' he says. 'Supermarkets pay almost no VAT in respect of food sales, whereas pubs pay 20%, a massive tax inequality which helps supermarkets to subsidise their alcoholic drinks prices, as many of us are aware. It makes no sense to discriminate against pubs and in favour of supermarkets.
'Wetherspoon, as an example, pays around £650,000 of taxes of one kind or another per pub per annum – let's preserve these golden geese, not kill them.
'There is a common myth in our industry, especially at senior levels, that the way to obtain tax reductions is to seek an audience with politicians, preferably over a pint, and to charm them into going easy on the pub trade, especially over excise duty at budget time. But that approach hasn't always worked too well over the years.
'We live in a democracy and voters love pubs and know that they create jobs and government revenue. Highlighting to the public the way in which taxes are tilted in favour of supermarkets is just as important as an audience with the Chancellor of the Exchequer.'