The pub giant says it will fully pass on the tax benefit to its customers starting this week (Wednesday 15 July) of the Chancellor cut in VAT on food and soft drinks 20% to 5%.
The price of a number of products including real ale, coffee, soft drinks, breakfasts, burgers and pizzas will all have their prices reduced as of Monday 20 July.
The pub group has long championed the reduction in VAT, highlighting the inequality of pubs against supermarkets, where they pay no VAT on food sales.
As a result of the cut in VAT, the group is dropping the prices of some of its English real ales, with a pint of Ruddles Bitter slashed by almost a third, across 764 of its pubs.
The pub group had previously said it had intended to raise prices on food and drink across its estate by about 20p a meal and about 10p per alcoholic drink.
“JDW will invest all the proceeds of the VAT reduction in lower prices, spread across both bar and food products, with the biggest reductions on real ale,” says founder and chairman Tim Martin.
“JDW has campaigned for tax equality between pubs, restaurants and supermarkets for many years. Supermarkets pay no VAT on food sales and pubs pay 20%
“Supermarkets pay about 2p per pint of business rates and pubs pay about 20p.
“These tax differences have helped supermarkets to subsidise their selling prices of beer, wine and spirits, enabling them to capture about half of pubs’ beer sales, for example, in the past 40 years."
Martin says the reduction in VAT will help pubs and restaurants create more jobs, help the high streets and eventually generating more tax income for the Government.
“Not every UK hospitality business will be able to reduce prices immediately. Some will need to retain the benefit of lower VAT just to stay in business.
“However, lower VAT and tax equality will eventually lead to lower prices, more employment, busier high streets and more taxes for the Government.”