Pubs and restaurants drop prices in tax protest

Prices at 15,000 establishments across the country fall by 7.5 per for one day

(Getty Images)

Thousands of pubs, bars and restaurants across the UK are slashing their prices for a day in protest against VAT.

As many as 15,000 establishments, including big-name chains like JD Wetherspoons and breweries like Heineken are throwing their weight behind the campaign, called 'Tax Parity Day', which aims to force the government to drop the VAT it levies on catering outlets.

This means that for today only, food in participating eateries will cost 7.5 per cent less.

Currently, customers are charged 20 per cent VAT on food bought in pubs and restaurants. The campaign believes that VAT should be cut by five per cent, bringing it line with the government's reduced rate, which it says would bring in an extra £1.5bn in taxes in just three years, and create as many as 600,000 jobs.

The protest has been organised by VAT Club, an industry pressure group run by French businessman Jacques Borel.

In a statement, the campaign said that lower VAT would 'stimulate demand' and boost the economy.

"Although the Treasury would experience a decline in direct VAT receipts were the rate to be reduced to five per cent, it would gain additional revenues from higher sector turnover," it said.

The government disagrees. A spokesperson for the Treasury said it does "not accept the industry’s case for a VAT rate cut for restaurants and catering".

“A five per cent reduced rate on catering services is estimated to cost around £9 billion to the Exchequer. This cost would have to be met either from increasing other taxes, which would have an adverse impact on growth and jobs elsewhere in the economy, or from increased borrowing which would risk raising interest rates on mortgages and business loans.”

Numerous restaurant and pub chains are participating. These include JD Wetherspoon, which has around 880 participating pubs, as well as the likes of Young’s, Fuller's, Pret a Manger, Pizza Hut, Subway, Shepherd Neame, Heineken and SA Brain.