Catering VAT cut ‘would create jobs’

Hundreds of thousands of new jobs could be created if VAT was cut by five per cent, according to a report by pub, restaurant and hotel firms.

A number of leading companies in the sector, including Pizza Hut, Wetherspoon, Punch Taverns, Prezzo, Subway and TGI Friday’s, are backing calls for the 20 per cent rate to be reduced.

A survey by the Jacques Borel VAT Club, which represents 43 pub, hotel and restaurant operators, found that firms said they would pass on more than half of any VAT reduction in lower prices.

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The report said this would increase trade by up to 12 per cent, leading to new jobs being created, and staff pay being raised.

A five per cent cut would cost the Treasury by between £5.5bn and £7.8bn, but the losses would reduce sharply as new jobs are created and tax revenue increases, it was argued.

Jacques Borel, a French entrepreneur who has successfully campaigned for VAT reduction in hospitality across Europe, said: “The study shows that a targeted VAT reduction to five per cent in the hospitality sector would be a very powerful and cost-effective way of creating employment in the UK.

“There would be an initial loss of revenue to the Treasury but, as many other countries in Europe have discovered, the losses are quickly reduced, and even made neutral, as the sector grows turnover and creates jobs.”