Taxing pubs

If you buy a pint of beer in a pub for, say, £4, a staggering 67p of the cost is VAT, 49p is alcohol duty, 15p is other taxes, and 15p is business rates.

Governments have to raise money to pay for public services somehow, but there’s some evidence that cutting beer duty helps to boost pubs and in turn the local economy and revenues.

An escalator introduced by the the Labour Chancellor, Alistair Darling, in 2008 increased beer duty automatically by 2 per cent above inflation each year.  Tax on beer rose by over 40 per cent, over 7,000 pubs closed and 58,000 jobs in the beer and pub industry were lost.

So I’ve backed cuts in alcohol duties to support our pubs, and four years ago the Government removed the escalator, cutting or freezing duties from then on.

But business rates are also an overhead, and I’ve become increasingly concerned that some local pubs, along with some other businesses, are facing huge business rates increases as a result of the recent revaluation.

Revaluation doesn’t in itself raise revenue for the Government (although the use of a certain inflation measure could).  In principle it is fair, intended to make sure that businesses are paying the right amounts.  But while there are winners there are inevitably losers too – and many of these seem to be local pubs.

One South Downs pub is facing a ruinous 600 per cent business rates rise, and to make things worse the increase has been backdated by two years.  As one landlord pointed out to me, pubs can hardly backdate the price of a pint.

Earlier this year I signed a letter to the Communities Secretary, Sajid Javid, expressing concern at the unfair burden imposed on pubs by the revaluation.  The Government responded by announcing in the Budget a £1,000 discount on rates for all pubs valued below £100,000 – around 90 per cent of all pubs.

Businesses can also apply for transitional relief, and the Government also announced that businesses losing small business or rural rate relief would see rises capped, as well as a £300 million fund to help those which are hardest-hit.

However, there’s been concern that some councils have dragged their feet in implementing this scheme.  Last week the Local Government Minister urged them to act quickly and get available help to businesses.

We’ve seen too many pubs close in West Sussex, and there are still 29 closing nationally every week.  More needs to be done to protect these important social hubs.