Were you eating out on Wednesday 25th September? If so, you might have enjoyed a pleasant surprise, with pubs and restaurants all over Britain dropping their food prices by 7.5% for the day. So what’s been going on?
Mass VAT protest
The event marked a mass protest against current tax conditions, organised by the French businessman Jacques Borel and his large, vocal lobbying group. They were protesting about the 20% VAT levied on food consumed in pubs and restaurants. And they were putting across a very serious message.
Creating loads of new jobs
They reckon that cutting VAT from 20% to 5% would generate an extra £1.5bn in taxes over the next three years, and create as many as 600,000 new jobs. But the government disagrees. The treasury doesn’t accept the case for a catering-based tax cut, which they calculate will lose the Exchequer a mighty nine billion pounds.
Three different VAT rates
Britain currently has three different VAT rates. The standard rate is 20%. The reduced rate is 5%. And there’s a ‘zero’ rate. Food is usually zero-rated unless it’s sold in restaurants, cafes and pubs, where it’s subject to the full whack.
The current system is… nuts!
Mr Borel, who has organised the same kind of campaigns in France and Belgium, says the existing VAT regime is unfair. How come? Because supermarkets don’t charge VAT on food, simply because people don’t eat the food they buy there on the premises.
It’s just one more controversy to hit the VAT scene recently, proving VAT is always emotive. And it’s easy to see why, when there are so many anomalies. Take cold takeaway food, which is zero rated when hot takeaways pay the standard rate. And nuts, which don’t attract VAT when they are in their shells. But remove the shells and they’re VATable… duh!