JD Wetherspoon founder Sir Tim Martin calls on hospitality industry to back political support for tax reform: JD Wetherspoon founder Sir Tim Martin has called on the hospitality industry to back political support for tax reform – “the best offer any politician has made to the sector in its history”. Sir Tim said: “A few days ago, the leader of the political party that is leading in the latest polls, offered the hospitality industry something many had assumed impossible – in effect, tax parity with supermarkets. There’s no question that this initiative would utterly transform the competitiveness of pubs, which have lost 50% of their beer trade to supermarkets since the millennium, according to analysts at bankers Morgan Stanley. In this plan, VAT would be reduced to 10% for the hospitality industry, with further reductions in excise duty and business rates to come. Most pubs could probably, for example, offer one beer, one lager and one cider for, say £2.99, with these tax reductions – and still have a higher gross margin than today. By eliminating the tax differential between supermarkets and the hospitality industry, and restoring margins to devastated businesses, these changes would enable pubs to regain some, or all, of their lost trade. You would think that this offer from Reform would have been greeted by a crescendo of enthusiasm, ecstasy and support from the licensed trade and its supporters. However, surprisingly, initial support has been underwhelming, at least from the great and the good in the hospitality industry. But, weirdly, we’ve been here before. A Frenchman, Jacques Borel, started a VAT Club in 2010, aimed at reducing VAT for food in the UK hospitality industry to 5%, having successfully achieved similar reductions in a substantial number of countries. Bizarrely, the then chief executives of two of the biggest pub companies were openly hostile to Jacques’ tax equality argument – others were indifferent or agnostic. Perplexed, Wetherspoon, at considerable cost, decided, at the time, to conduct a major survey of UK publicans, those on the front-line. Unsurprisingly, sanity prevailed in the lounge bars of UK pubs. Cardinal Research reported in 2013 that ‘96% of licensees think the pub and restaurant industry should campaign for a reduction of VAT on food’. Cardinal added that ‘94% support the campaign by the VAT Club’ and that ‘86% agree that it’s unfair that supermarkets pay no VAT on food but pubs/restaurants have to’. But here we go again! So what goes through the minds of the directors of the biggest pub companies as they watch their trade switch, almost weekly, to supermarkets, due to the vast tax-supported price differential between the on and off-trade? A range of thoughts, probably. But credit where it’s due, the family brewers, long-termists and driven by principle, not politics, were on board. Well done to Fuller’s, Shepherd Neame, St Austell and many others. The principle in question is that the beleaguered hospitality industry needs to get behind whatever organisation or political party promises a fair and equitable tax regime. So here’s the question for the British public – and for the senior figures in the hospitality industry. Do you believe in tax equality with supermarkets? If you don’t, pubs may increasingly become a ‘special occasion’ experience, as a result of high prices, rather than the melting pot for daily rendezvous between neighbours, workers and lovers of the glorious past. If you do believe in tax equality, then you’d better support it, because the supermarket industry has nicked half your trade in recent years – and it will gobble up most of the rest in no time flat. Finally, it’s not your job to worry about how tax equality is funded. As someone once said, the tax system needs a ‘sensible rebalancing’. And as a former Treasury official said to Jacques Borel and myself – don’t tell us how to raise the money. It’s not a lot in the scheme of things. Tell us what’s wrong and we’ll do the number crunching.”

Premium Club subscribers to receive all 49 videos from Restaurant Marketer and Innovator on Friday: Premium Club subscribers are to receive all 49 videos from Restaurant Marketer and Innovator on Friday (13 February), at 9am. The videos include: Romy Miller, chief marketing officer at Knoops, sharing how the brand carved out a new category in the crowded drinks space, cutting through noise to create a cult following; Evie Horsell, head of communications UK & Ireland at Big Mamma Group, revealing how the team is rewriting the rulebook on restaurant launches; and Olivia Fitzgerald, managing director at 125 Data & Insights, speaking with Tom James, managing director at Bill’s, about how it became the first hospitality brand to invite its customers quite literally “into the boardroom”. A Premium Club subscription costs an annual sum of £495 plus VAT for operators and £595 plus VAT for suppliers. Companies can now have an unlimited number of people receive access to Premium Club for a year for £995 plus VAT – whether they are an operator or supplier. Email kai.kirkman@propelinfo.com today to sign up.