Concession on alcohol may be necessary in VAT fight, warns Borel

By Carina Perkins contact

- Last updated on GMT

Jacques Borel has warned that  'political sensitivities' around including alcohol may require a 'realistic concession'
Jacques Borel has warned that 'political sensitivities' around including alcohol may require a 'realistic concession'

Related tags: Macroeconomics

Jacques Borel has warned that it might be necessary to make some concessions on alcohol if the cut VAT campaign is to be successful.

In an open letter to VAT Club members, Borel admitted there were ‘political sensitivities’ around alcohol being included in the campaign to cut hospitality VAT from 20 per cent to 5 per cent, and warned that some alcohol might have to be excluded from demands if the campaign is to win government support.

“While we have not officially withdrawn alcohol from the demands we believe that a realistic concession might eventually be for beer and cider and table wine, when served with a meal, to attract the new reduced rate,” he said.

“We shall see what the government says but in the meantime I would value your opinion.”

Growing support

Updating supporters on the progress of the campaign, Borel said that it was ‘true and not unexpected’ that the government reaction had been negative, but this was consistent of his experience in other countries where ‘changes of heart become evident at the last minute.’

He added that MPs had been ‘almost entirely positive and supportive’, and he had a programme of further meetings with peers and MPs with the objective of achieving 100 meetings by the end of the year.

Noting the wide media coverage of the VAT campaign​ and the recent Tax Equality Day​, Borel said the public was increasingly aware of the ‘inherent unfairness of the current VAT regime’.

“I believe that public and political support will continue to grow and will influence economic policy when the Chancellor is seeking radical policy initiatives to address youth unemployment and stimulate economic growth,” he said.

“Our aim is that all parties should adopt VAT realignment in their manifestos and perhaps compete with each other as to its extent.”

Business pledge

In a bid to convince the government that the benefits of a VAT cut would be passed back consumers or reinvested in the people and fabric of hospitality businesses, Borel proposed a ‘business pledge’ that allocates the value of the reduced VAT.

He suggested that 60 per cent be returned to consumers through reduced prices, 20 per cent be allocated to investment in facilities, 10 per cent earmarked for payroll benefit, 5 per cent invested in staff training and apprenticeships and 5 per cent retained in profits and dividends.

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