Pubs are hugely important to their communities they serve. They play a unique role in our society and as part of our history and our national identity. Yet this is not currently properly recognised in the tax system and as a result the burden on pubs is both unfair and too high.
Pubs and publicans need a fairer deal when it comes to the tax levied on pubs and a tax system that recognises the community value of pubs.
Currently the overall sector picks up 2.8% of the overall UK business rates bill nationally (£500 million a year), but has only 0.5% of the turnover of UK businesses. This is clearly not fair tax for pubs and is a result of a uniquely skewed business rates system. This system actively penalises many pubs and is a key factor why many otherwise viable pubs struggle to survive, especially with many pubs not eligible for any relief or reductions.
The current system of business rates for pubs is a mess, due to the interference of the large pub-owning companies lobbyists, who pushed for the contrived system where pub rates are based on ‘fair maintainable trade’. This confused system means that some pubs are paying unrealistic and unfair business rates in relation to their size and actual turnover. This urgently needs to be reformed and publicans must be properly consulted, not just the pub-owning companies.
Review and Overhaul of Business Rates
We are calling on the Government to finally get on with the long overdue review of the overall business rates system that has been promised but so far not delivered. It is widely recognised that the system is not fit for purpose and that it needs reform, yet this has still not happened.
This review must look at a more sensible way of taxing business overall, recognising that business has changed and crucially ensuring that businesses that are dependent on physical premises, as pubs are and will always be, are not penalised as they are now, and that online retailers and supermarkets pay their fair share.
Recognising the value of pubs in the tax system
The review must also look specifically at the way pubs are taxed, reforming the business rates system but also looking at how the acknowledged community value of pubs can be recognised.
This should include looking at permanent rates/local tax relief for pubs that demonstrate community benefit. It is also possible to look at the level of VAT pubs pay, something that has happened with hospitality businesses in other countries.
We believe that the Government should look at a way to legally recognise pubs as being distinct from other businesses, as it would then be possible to tailor suitable taxation measures, as well as to give pubs more specific protection in the planning system. See our Give Pubs Protection campaign.
Fair Tax for Pubs – to directly help pubs
We are campaigning for fairer tax for pubs – but to help pubs the changes need to be taxes that are actually paid by pubs, especially business rates. Beer and alcohol duty is a producer tax levied on brewers and whilst we support brewers and especially smaller breweries, the realty if that overall cuts in beer duty disproportionately benefit the global brewers, the big pubcos (who all too often pocket cuts in beer duty rather than passing them on to publicans) and supermarkets who can then push the prices of beer even lower.
There is no credible, independent evidence to show that beer duty is responsible for pub closures, indeed any such research is invariably commissioned and presented by the representatives of those responsible for thousands of pubs closures, the large pub-owning companies.
The reality is that cuts in general beer duty do very little to assist pubs, so to help pubs we need proper pro-pub taxation that creates a fairer system of the tax that pubs pay.
So if the decision makers in our Government and councils value pubs and the unique role they play in communities, we need to see this recognised in the tax system – with fairer taxes for pubs. This means lowering the taxes that pubs have to pay directly, which are currently too high.