Debate Magazine

Tim Martin Seems to Get It.

Posted on the 05 July 2020 by Markwadsworth @Mark_Wadsworth

Pub owners say tax reductions are needed to keep industry afloat
Wetherspoons chairman and founder Tim Martin said “tax equality” was needed if pubs and restaurants were to “survive and thrive” in the future.
He told the PA news agency: “Supermarkets pay almost no VAT on food sales and pubs pay 20%. Without equality the price gap between pubs and restaurants and supermarkets will continue to grow so that ‘on-trade’ becomes more and more uncompetitive.”

CAMRA still don't get it:
The national chairman of the Campaign for Real Ale (Camra), Nik Antona, said he would like to see the Chancellor reduce beer duty – the tax on producing and selling beer – for the “on-trade”.
Mr Antona said: “He could reduce the duty on the on-trade and make beer cheaper in pubs than it is off-site, in supermarkets, and therefore reinvigorate the industry. It would bring people back to the pub and stop them drinking at home.”

This chap knows what he wants, but doesn't know how to get it:
The pub’s licensee, Steve Boulter... told PA: “Having had three months of all being on canned beer, which is a pound a can, you do think: ‘Will people come back?’ when it’s three or four pounds a pint. I agree with Nik. Pricing makes a big difference so it needs to be the other way round – cheaper in pubs and a bit more expensive in the supermarkets.”
That can easily be achieved.
Broadly speaking, the VAT on a £4 pint in the pub and the beer duty are about 70p each. Pub landlord gets £2.60 net.
On a 80p multi-pack can (440 ml) in the supermarket, the VAT is 13p and the beer duty is 54p. Supermarket gets 13p net.
A pint costs five times as much as a can.
If they scrapped VAT completely and added 50% to beer duty, what happens?
Let's assume that the consumer bears all the tax for simplicity.
Pub landlord can drop price to £3.65, minus £1.05 duty, still gets £2.60 net.
The can now costs 94p, minus 81p duty, supermarket still gets 13p net.
A pint now costs 'only' 3.9 times as much as a can, which is what the pub landlord wants.

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