UK pub companies back VAT cut

A new report by pub, restaurant and hotel companies has claimed that hundreds of thousands of new jobs would be created in the UK if VAT was cut by 5%.

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

Jacques Borel, a French entrepreneur who has successfully campaigned for VAT reduction in hospitality across Europe, told the Press Association: “The study shows that a targeted VAT reduction to 5% 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.

“The UK should follow the lead of its European neighbours in boosting its economy and creating employment, particularly among the young, many of whom already begin their careers in the leisure sector.”

A number of companies in the sector, including Wetherspoon, Punch Taverns and TGI Friday’s, are now backing calls for the UK’s 20% VAT rate to be reduced.

According to the report the tax cut would see trade increase by 12%, leading to new jobs being created and staff pay being increased.

A 5% cut would cost the Treasury by between £5.5 billion and £7.8 billion, but the losses would reduce sharply as new jobs are created and tax increases, it was argued.