More taxes on pubs and restaurants mean pricier pints and meals for you
Yesterday morning’s inflation figures will come as little surprise to anyone in hospitality.
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For months, we have been absorbing soaring energy bills, facing increasing supply chain costs and the challenges of the cost-of-living crisis. Yet, the greatest pressure is coming from a relentless squeeze of government-imposed costs.
It’s clear the UK economy is stuck in a low growth and high inflation trap, and the only certainty is that increasing taxes and costs would make the situation worse.
Our latest quarterly members survey – run in conjunction with the British Institute of Innkeeping, the British Beer and Pub Association and Hospitality Ulster – shows that the £3.4 billion in additional annual cost that hit the sector in April has forced eight in 10 hospitality businesses to put up prices, which is no doubt a factor fuelling inflation.
Pulling the tax lever on hospitality again would be the worst possible thing to do and instead the Government should lower business rates, fix NICs and cut VAT at the Budget to back hospitality and stop businesses from being taxed out.
These figures are stark, revealing how tax rises have forced almost three-quarters of businesses to operate below 85% of their required workforce capacity.
They are being held back from investing and growing. More worryingly, one in five has no cash reserves left.
The costs imposed upon us do not result in a sustainable model for growth, and the damage so far has resulted in 84,000 jobs lost since the last Budget.
The Government is facing important decisions at this autumn’s Budget.
If it wants thriving hospitality and high streets, which I’m sure it does, it needs to recognise the devastating impact April’s cost increases had on our sector and bring forward measures to reverse the damage already done.
By lowering business rates, fixing NICs, and cutting VAT, the Chancellor can unleash investment, create jobs, and empower businesses to keep prices down.
It’s time to back a sector that can drive growth, not tax it into the ground.
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Kate Nicholls is the Chair of UKHospitality
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