Have you heard about Tax Equality Day yet? If you are planning on going out to eat or drink on Wednesday 24th September you may well be able to take advantage of it. This is the day when some 15,000 restaurants and pubs are going to reduce their prices by 7.5% for all their customers.
Why are they doing this? It’s to do with VAT. More specifically it has to do with the outcome a VAT cut of 15% in the hospitality industry would produce for customers. At the moment businesses such as restaurants and pubs pay 20% VAT. Many people in the industry are trying to convince the government to reduce that percentage to just 5%. This would lead to customers enjoying a discount of 7.5% on the current prices they pay for food and drink.
Thousands of players in the hospitality industry have decided they will promote the discount on 24th September in the hope of raising awareness of the advantages of such a reduction. Those who are promoting Tax Equality Day are hoping many other venues, both large and small, will also get involved as it gets closer to the big day.
But what would the benefits be for the hospitality industry if such a significant cut were to be made? Obviously we can see people will get cheaper food and drink. Cheaper prices will hopefully encourage more people to eat out and enjoy visiting pubs more often. This in turn will bring in more revenue for the industry. It is also thought there would be a knock-on effect that would lead to more people being employed in the industry, because of the increase in customers. Just imagine how the tourism industry would be affected – and it would all be in a positive way.
Of course for all this to happen the government has to be prepared to grant a 15% reduction in tax. And this is the sticking point. So far they have responded with a firm ‘no’. They say the move would be too expensive for the government because a 15% reduction would be a significant loss of revenue. It is thought however that an increase in business for those affected could help replace some of that income. For example instead of a business paying 20% on a turnover of £100,000 they could have a significantly increased turnover and still pay a significant amount of tax.
All this is a moot point at present since it looks as though there is no chance of the move going ahead. But as long as Tax Equality Day highlights the positives in this manner there will be a better chance of being able to persuade the government in the future. Even if the industry has to wait for a few years the results might eventually be worth it.