Wetherspoon chairman hits out at tax inequality penalising pubs

In the latest edition of Wetherspoon News, Mr Martin claims that the UK tax system has had a “huge impact” on pub closures.

Mr Martin said: “No one has stepped forward to accept blame for the killing of 10,000 pubs which have shut down in the last 10 years – about 15 per cent of the total number of pubs in the country...a large amount of blame can be attributed to the VAT inequality between pubs and supermarkets: supermarkets pay no VAT on food sales, whereas pubs pay 20 per cent, allowing supermarkets to subsidise their drinks prices with their massive ‘tax break’.

“Another huge factor relates to the business rates disparity between pubs and supermarkets.”

According to Mr Martin, the average pub pays around six per cent per cent of its sales as rates.

He added: “This amounts to about 15p a pint, believe it or not. (Bradford-based) supermarket chain Morrisons’ chief executive, Dalton Philips, told the Financial Times in July 2013 that his company paid £240m of business rates in the previous year. Morrisons’ accounts for the year in question, to February 2013, show sales of £18.116bn.

“Supermarkets, therefore, appear to be paying rates somewhere in the region of 1.32 per cent of their sales. So, a pint purchased in a supermarket for about £1.25 will have a business rates cost of roughly 1.65p.

“This analysis clearly demonstrates that each pint purchased in a pub has approximately nine times the level of business rates as a pint purchased in a supermarket. I doubt that the Government or the treasury has malicious intentions towards pubs, but I strongly suspect that they haven’t thought through the financial consequences of their actions, a malaise which also afflicted the previous Labour government.”

A Treasury spokesman said: “This Government’s priority is to tackle the record budget deficit in a decisive but fair way, to restore confidence in our economy and support the economic recovery.

“Figures from the ONS suggest reducing VAT to five per cent for all catering services provided by restaurants, pubs, cafes and canteens would cost the Exchequer between £9bn and £10bn a year, therefore, we are unconvinced of the economic case for a VAT cut.

“For all catering services, the significant cost of a reduced rate of VAT would have to be met, either from increasing other taxes or from increased borrowing.

“This would either have an adverse impact on growth or risk raising interest rates, which would undermine the recovery and have an impact on families and small businesses, including those in the restaurant and catering sector.”