Pub industry levies 'unsustainable', says JD Wetherspoon

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The Independent Online

The founder of the JD Wetherspoon pub chain today renewed his attack on the "unsustainable" levies facing the industry after revealing his firm's tax bill topped £450 million in the last financial year.

Tim Martin, who is chairman of the 823-strong pub business he set up in 1979, said the tax disparity between supermarkets and pubs was creating a serious competitive disadvantage and leading to the closure of many pubs.

His comments came as Wetherspoon reported record sales of £1.07 billion for the year to July 24, an increase of 7.6% on a year ago although pre-tax profits fell 6% to £66.8 million due to higher interest payments.

Mr Martin said total taxes paid to the Government were £453.1 million, including VAT of £204.8 million, excise duty of £120.2 million, PAYE and National Insurance of £65.2 million, property taxes of £41.7 million and corporation tax of £21.2 million.

He said: "We believe that the current level of tax levied on the pub industry is unsustainable and is directly leading to the closure of many pubs, which have become uncompetitive in relation to neighbouring countries and to supermarkets."

Mr Martin pointed out that supermarkets pay no VAT on food sales, whereas pubs pay 20%, adding that the cash tax per pint of beer paid by supermarkets is far less than that paid by pubs.

"This tax disadvantage has inevitably led to an increase in beer sales from supermarkets and a consequent decline in pubs' beer sales. In addition, British pubs and restaurants now suffer a huge competitive disadvantage, compared with those of our nearest major neighbour France, which levies far lower levels of excise duty and VAT," he added.

Wetherspoon said like-for-like sales were 0.4% higher in the six weeks to September 4, compared with 2.1% in the previous financial year.

The company added: "The well-documented increase in areas such as utilities and bar and food supplies, combined with ongoing pressure on consumers' income continue to make this a tough trading environment."

Shares were more than 5% lower today after the lacklustre start to the company's new financial year.

Douglas Jack, an analyst at Numis Securities, said: "Wetherspoon's low-margin model remains the most sensitive to increases in costs."

Wetherspoon created around 2,800 jobs and opened 50 pubs during the financial year, a rate of openings it hopes to repeat in the year to July.