A Peterlee pub is to cut the price of all food and drink by 7.5 per cent on Thursday, September 23 – to highlight the benefit of a permanent VAT reduction in the hospitality industry.
Prices at The Five Quarter in Hailsham Place will be reduced for one day only to mark Tax Equality Day in the Wetherspoon pub.
So, for example, a pint of beer costing £1.99 will be reduced to £1.84 and a traditional breakfast costing £3.59 will cost £3.32 on the day.
At present all food and drink in pubs is subject to five per cent VAT as a result of the VAT cut by the Chancellor in July 2020.
However, this will change on October 1, when the VAT rate will rise to 12.5 per cent, with the government’s aim of returning VAT to 20 per cent, in stages, in 2022.
By comparison, supermarkets pay zero VAT on food, and are able to use that saving to sell alcohol to its customers at a discounted price.
The pub’s manager, Mel Gallagher, said: “It is unfair that supermarkets pay zero VAT on food, but pubs and restaurants, in normal circumstances, pay 20 per cent.
“Pubs have been under fantastic pressure for decades due to the tax disadvantages it has with supermarkets.
“Customers coming to The Five Quarter on Thursday September 23 will find the price of their food and drink is lower than normal.
“However, as a result of the VAT increase to 12.5 per cent on October 1, we will have to increase food prices.
“Therefore, on Wednesday September 29, we will increase prices on our meals by 50p.
“We urge the Chancellor to create tax equality between pubs and supermarkets by making the current VAT regime for pubs permanent.”