Campaign to cut VAT continues despite rejection from Treasury

27-Jul-2011 - Last updated on 28-Jul-2011 at 13:38 GMT

The PMA's Thrive on 5 campaign is gathering support and will continue to fight the Government

A campaign which aims to reduce VAT to 5 per cent for the hospitality industry has vowed to continue despite claims from the Treasury that there is no 'compelling evidence' for the cut.

BigHospitality's sister publication the Publican's Morning Advertiser (PMA) said it would continue to fight for the cut through its Thrive on 5 campaign, although a letter from the minister in charge of VAT David Gauke on the subject had claimed there was not enough evidence a reduction in tax would help the trade.

The PMA said Charlie Elphicke, MP for Dover and Deal in Kent, had written to Chancellor George Osborne after licensee Peter Killin, of the Smugglers Inn, in Dover had raised the issue of a VAT cut.

Gauke's letter of response said: “We have no compelling evidence, nor have we been presented with such evidence that leads us to believe there is a strong case for what the constituent is suggesting.”

On the suggestion of a VAT cut on restaurant services, which includes food and drink such as alcohol as part of a meal, the minister said that the economic situation of the country remains a top priority.

“Any suggestions that are made will be considered in the context of the nation’s finances,” Gauke added.

Campaign support

The PMA's campaign has received support from across the pub trade since its launch in February.

Last week the bosses of major pubcos JD Wetherspoon, Marston’s, Spirit, Mitchells & Butlers and Greene King all signed up in support for the campaign, which also has the backing of the Federation of Small Businesses and French lobbyist Jacques Borel, the man behind the 5.5 per cent VAT rate for the hospitality sector in France.

Long term

Speaking to the PMA, licensee Killin dismissed the minister’s response, claiming there is good evidence to show how well a VAT cut has worked in other European countries.

He said: “In Europe they have instigated a 5 per cent VAT rate and it has worked well. You can put a lot of time and effort into calling for the VAT cut, but the Government seems to have already made its mind up.”

PMA's Ewan Turney said the publication would not give up without a fight and urged more people to give it support: "This is a long term campaign and we must keep up the support and keep banging on at the Government," he said.

Sign the PMA's Thrive on 5 petition here

Download the VAT briefing pack here