The Leader of the Opposition and of the Liberal Democrat Group on Oldham Council, Councillor Howard Sykes MBE has welcomed the reduction in VAT on food purchased in pubs, cafes and restaurants from 20% to 5% for a six-month period starting last week.
This was one of the Chancellor Rishi Sunak’s announcements on the 8 July.
Councillor Sykes is especially pleased because the Oldham Liberal Democrat Group proposed just such a VAT reduction in a motion almost six years ago to Oldham Council.
Councillor Sykes: “In September 2014, the Liberal Democrats brought a motion before Oldham Council calling for a VAT cut to 5% from 20%. This was in support of Tax Parity Day, an annual event hosted by pub chains, such as Wetherspoons, where food is reduced in price for one day to demonstrate the value of a VAT reduction to customers. Unfortunately, the Labour and Conservative Groups both voted against the motion and so it was lost.”
Chancellor Sunak has also announced that in August customers will save up to £10 per head if they eat out on Mondays, Tuesdays and Wednesdays.
Councillor Sykes added: I am delighted that six years on, a Chancellor has finally recognised that VAT needs to be reduced at a time when people are struggling with reduced incomes, many because of shorter working hours or unemployment caused by the Covid-19 pandemic. I hope that pubs, restaurants and cafes will pass on the VAT reduction to customers and that many establishments will register for the reduced-price meal deal so that families can again begin to enjoy the experience of eating out together.”
However, Councillor Sykes would like to see the VAT reduction become permanent. He concluded: “The VAT treatment on food in catering establishments is manifestly unfair. Our pubs are still struggling after the Covid Lockdown and the economic impact of the disease is likely to be with us for years so it would be both fair and sensible to continue with the VAT reduction indefinitely, with the condition that pubs, cafes and restaurants pass on the benefits to customers. This will boost trade and help safeguard pubs as social hubs in our communities and safeguard vital jobs in our hospitality industries.”
Oldham Council 10th Sept. 2014 – Tax Parity for Pubs and Restaurants
This Council notes:
- That supermarkets pay no VAT on food whereas pubs, cafes and restaurants are obliged to pay the full 20%
- This means that the costs avoided by supermarkets can be used to reduce the price of alcoholic products
- This has led to a rise in domestic alcohol consumption, as well as placing further financial pressures on the licensed trade
- That in France a reduction in VAT to 5% is estimated to have led to the creation of 225,000 jobs in the catering and licensed trades in the first year alone.
This Council welcomes:
- The actions of family brewers and restaurant and pub chains in challenging this inequality by hosting the second annual Tax Parity Day on 24th September 2014. They are reducing prices for customers to demonstrate the benefits of reducing VAT to 5% in pubs and restaurants.
- That Tax Parity Day forms part of an EU campaign to reduce VAT for pubs, cafes and restaurants.
This Council therefore resolves to
- Support the call by the VAT Club, led by Jacques Borel, for a reduction on the VAT chargeable upon food sales in pubs and restaurants from 20% to 5%
- Request that the Chief Executive write to the Chancellor of the Exchequer and the three local MPs outlining and seeking support for this Council’s position on Tax Parity.
Proposed by Cllr Diane Williamson, Seconded by Cllr John McCann