Knowing that Wednesday 24 September was ‘Tax Equality Day’ I popped into a local participant which was advertising a 7.5% discount. Spotting that my breakfast wasn’t, in fact, any cheaper, I politely asked about the discount arrangements. While I did learn that the discount applied to ‘selected lines only’ and not my breakfast I was also told that it was to highlight the fact that ‘supermarkets don’t charge VAT on beer and we want to level the playing field.’
I’m all for measures to keep pubs open (and to ensure cheaper breakfasts) but I thought my server’s explanation a little flawed. Supermarkets do of course charge VAT on beer but crucially while most groceries are VAT-free, catering is subject to VAT at 20%.
However, the UK, could, if it chose, apply a reduced, 5% rate of VAT to catering and certain other ‘labour intensive’ services. It has chosen not to. There is a similar Cut the VAT Campaign supported by 60 organisations, making a well-argued case for the Government to reduce VAT on housing renovation and repair work from 20% to 5%.
Trouble is, I don’t see the Government reducing VAT receipts any time soon. Although I’d be prepared to eat my words on this. Perhaps I could start with the words ‘mushrooms’ ‘sausages’ and ‘bacon’.