Opinion Piece: As Eat Out to Help Out ends, time to fix the unfair tax burden on pubs and restaurants
In an opinion piece for inews.co.uk, Oakman Inns CEO Dermot King argues that ambitious reforms are needed to support the hospitality industry.
As Rishi Sunak’s Eat Out To Help Out Scheme comes to an end, having dished up 65 million meals in 13 days, a question for reflection might be whether it was a good use of taxpayers’ money.
Bars and restaurants certainly benefited from the scheme but given the huge financial cost of dealing with Covid-19, were there better ways to stimulate a recovery of sorts?
Hospitality Industry is Ignored
In his inauguration speech last year, Boris Johnson spoke about left-behind towns and forgotten people. He might have added ignored industries.
Hospitality and tourism accounts for 10 per cent of the UK workforce and is in the top three private sector employers. And yet hospitality customers are taxed harder than almost everyone else in Europe.
On average, UK tourists, domestic or otherwise, pay three times as much tax as their European counterparts and restaurant customers pay almost twice as much tax as our closest competitors.
Furthermore, customers in a restaurant pay 20 per cent VAT (ignoring the current temporary cut to 5 per cent), whereas the same produce in a supermarket does not attract any.
In our bars, almost 40 per cent of the price of a pint is tax. The UK has one of the highest rates of excise duty in Europe, three times the EU average and four times more than Germany.
Business Rates
And then there is the issue of business rates, a tax system that was invented when the country could control its borders and value of commerce had a relationship with size of property.
So much business is conducted online these days that those relationships are long broken. Yet the tax take continues to be shared among bricks-and-mortar businesses. With gig-economy businesses undercutting those that are property-based by circumventing employment and tax laws, nothing other than the abolition of the business rating system will level the playing field.
The industry stands accused of not creating highly skilled jobs – by which the government means highly paid jobs – but, with the taxman taking such a thick slice, hospitality is left to compete with one arm tied behind its back.
Ambitious Policies are Needed
There is a better way and Mr Sunak’s helpful scheme has shown us the way. With some restaurants showing more than 200 per cent growth in those 13 days, demand has been stimulated, profits improved, customers satisfied and jobs created, especially jobs for young people, the group at most risk from an economic downturn. That adds up to economic recovery.
We owe it to young people to provide industries to be ambitious about. In many of our seaside and market towns, the driving industry is tourism and hospitality. A fairer tax system will provide the impetus for investment that will drive ambition.