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Fighting the tax burden is killing pubs

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Fighting the tax burden is killing pubs
Article date: 12 Apr 2012

‘Pubs are shutting down in a big way now, but you don’t see it here in London – it’s much more marked in the North. ‘Never mind Wetherspoons – it’s a shame for the villages with no pubs. It’s a shame for the less affluent parts of the country.’ 

At the heart of the decline is tax, Martin says. It’s the same tune he has been playing all his publican life – the difference between taxes facing supermarkets and pubs.

His outbursts on the issue have becoming so dependable that analysts at Hargreaves Lansdown called the company’s most recent trading statement – which broke down every penny of the group’s £250.1m tax bill – ‘the party political broadcast on behalf of the Pubs Party’.

But Martin is undeterred. ‘There’s a tax incentive given by the government for people to buy beer at supermarkets and take it home or to the park,’ he says.

‘Pubs pay 20 per cent VAT on food, while supermarkets pay nothing. That means they can cross-subsidise beer. And since VAT went into double figures, pubs have lost 50pc of their beer sales.’ He adds the last Labour government ‘compounded’ the problem by cracking down on pubs in an effort to stop binge-drinking.

But the move backfired – as pubs became more expensive to run, prices went up and people deserted them in favour of ‘DIY drinking’. This, Martin says, actually increased the problem. ‘Pubs aren’t perfect, but at least people are in some kind of supervised atmosphere,’ he adds.

The problem, the Government would surely say, is there is no money for a tax giveaway to the pubs industry. Martin, as you might expect, disagrees vehemently.

‘Gordon Brown had a very, very poor understanding of economics – particularly pub economics – and I’m not sure George Osborne understands it that well either.’ Martin adds: ‘He can increase the amount of tax he levies by encouraging people to use pubs.

‘He gets £1.20 a pint in tax for every pint consumed in a pub. He doesn’t get anything like that – much less than half – from supermarkets.

‘Pubs also generate three jobs per pint compared to a supermarket.’

If the government reduces tax and VAT on food for pubs and restaurants, he says, they will receive it back straight away. ‘So it’s win-win for Georgy-boy and for us!’

 

Click here to read the full interview which appeared in the Daily Mail on 12 April 2012

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