Thank you for contacting me about tax on beer and pubs. I appreciate the importance of this issue, particularly with pubs having been hit so hard by COVID-19 and another difficult Christmas due to the Omicron variant.
Pubs are a vital part of our high streets and social fabric in communities throughout the country. They also play an important role in our national economy. Indeed, before the pandemic, the sector was supporting 900,000 jobs, generating £23 billion in economic value and providing £13 billion in tax revenues. I am aware, though, that pubs face a range of tax pressures, including beer duty, business rates and VAT. Even before the pandemic, they were under severe threat, with a 15% fall in their number from 2010 to 2020.
I note Long Live the Local’s proposed tax reforms. As you will know, the Government has frozen beer duty, as well as consulting on reforms to alcohol duties from 2023 that would reduce rates on draught beer, as well as some lower strength beers.
However, hospitality businesses still face the prospect of tax rises in April, including a 7.5% VAT increase. And while the one-year business rates discount for hospitality is a positive step, UKHospitality has highlighted that it is not enough to offset tax increases and inflationary costs, while many businesses are also excluded.
I am concerned that the Government is not listening to hospitality and other businesses about the support they need. I believe it needs to assess what impact ending the reduced rate of VAT will have on jobs and businesses in the sector. On business rates, meanwhile, I believe it has missed the opportunity for fundamental reform. In the final report of its business rates review, the Government said it was “not proposing changing the nature of the tax, or the basis of valuation”. I believe, though, that we need to scrap the current system and replace it with one that is fairer and provides a level playing field for the high street businesses that do so much to enrich our lives. Given the number of jobs depending on our pubs, an overhaul of business rates is long overdue and must be part of a real plan to help our hospitality industry thrive.
Thank you once again for contacting me.