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JD Wetherspoon founder urges chancellor to cut VAT on pubs

Tim Martin condemns ‘unsustainable competitive disadvantage’ of disparity between tax regimes for supermarkets selling alcohol and pubs

Tim Martin, the outspoken founder and executive chairman of pub chain JD Wetherspoon, has delivered a sweeping attack on the tax regime imposed on the pub and eating-out sector.

He called on the chancellor to rein back VAT on bars and restaurants, in line with similar measures taken to aid struggling major employers in the service sector in France and Ireland. Martin also used the platform of the company’s full-year results presentation to attack what he saw as the unfair advantages supermarkets enjoyed in alcohol sales over pubs.

“The biggest danger to the pub industry is the tax disparity between supermarkets and pubs, creating a serious and unsustainable competitive disadvantage,” he said. “In addition, our pubs pay far higher VAT than those of our nearest neighbours, Ireland and France, as well as having the second highest rates of excise duty on beer and wine in Europe.”

In May, drinks industry leaders wrote to the chancellor complaining that beer duty had risen by 52% since 2004. The Labour government introduced a beer duty escalator in 2008 which increases the levy by 2% on top of inflation each year. The escalator has another two years to run.

Most industry leaders remain privately pessimistic about the prospect of major tax breaks despite record numbers of pub closures this year, although they are urging the government to bear in mind the huge number of job losses within the industry as the Treasury prepares to calculate the next rise in duty under the escalator scheme.

Martin, nevertheless, insists the government should consider a VAT reduction for the sector, believing it would stimulate demand and therefore generate more for the Treasury’s depleted coffers. “If it will produce more tax for the country and generate more jobs, but take away the superior tax position of the supermarkets, it’s got to be a good thing.”

Martin spoke after Wetherspoon announced that, for the year to 24 July, it had for the first time reached more than £1bn in sales. Comparable sales were up 2.1% and underlying operating profit for the group rose 2.3%.

Despite the tough economic outlook, the company said it intended to open 50 pubs in the coming 12 months, a similar rate of openings to last year.

The company also announced its long-standing senior non-executive director and deputy chairman John Herring would not stand for re-election next month. He is chairman of the audit committee and of nomination committee.

According to Wetherspoon’s annual report, his role also involves “monitoring the performance of the chairman, on behalf of the board”. Asked about the departure, Martin, who controls 24% of shares, said he was not clear on the reasons.

Last October, a month after Wetherspoons’ annual shareholder meeting, Martin ousted two of the pub group’s four executives in a move that appeared to signal he was reasserting his influence. Keith Down, the finance director, who had been at Wetherspoon for two years, was removed, as was Paul Harbottle, chief operating officer, who had worked at the group for eight years. © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds