UK bars cut prices in tax protest

Thousands of restaurants and bars across the UK are cutting their prices today by 7.5% to highlight the high rate of VAT the sector pays.

It’s thought 15,000 bars and restaurants across the UK will take part in Tax Parity Day

Tax Parity Day has been organised by Jacques Borel, the man behind the VAT drop in France and other countries across Europe.

Currently the UK’s on-trade pays a 20% VAT rate on all food and beverage sales, while the off-trade pays 0% VAT on food sales.

Borel has campaigned in the UK for several years for a lower rate of VAT to be introduced to ease the regulatory burden on bars and restaurants.

He also claims such a rate would generate an extra £1.5bn in taxes in three years, as well as 600,000 jobs.

“The first consequence [of a VAT reduction] will be a reduction in price for consumers,” the VAT Club Jacques Borel said. “Based on our surveys prices will fall by around 7.5%.

“This represents a pass-through of 60% of the decrease in tax. Experience from other European countries, including France, Germany, Ireland and Sweden, suggest an increase of around 10% in customers, requiring additional staff. This is supported by several economic studies. The other 40% will be used for wider benefits such as higher wages and investment.”

The VAT Club Jacques Borel believes over 15,000 outlets will take part in Tax Parity Day today, with those participating a 10% increase in sales.

Tim Martin, chairman of JD Wetherspoon pub chain, told BBC Radio 5 live: “Our point is that not everyone pays VAT in the same way pubs do… supermarkets can subsidise their sales of alcohol, each pint that’s sold in a pub generates far more tax than it does in a supermarket.”

The UK government however disputes the figures, claiming a 5% reduced rate on catering services would cost the Exchequer around £9bn.