Now pubs demand business tax reform

THE hospitality industry has joined calls for a root and branch reform of business rates to halt an avalanche of closures.

There are 16 pubs, bars and restaurants closing every day as the High Street crisis bites, according to UK Hospitality, which represents 90pc of the industry.

It has demanded that whoever is Chancellor following the General Election cuts business rates to curb the impact of the ‘discriminatory’ tax.

Major retailers have also called for action, with the bosses of Tesco, Sainsbury’s, Co-op, Ikea, Halfords and HMV adding their voices to the demand for change.

The issue has been highlighted by this newspaper’s Save Our High Streets campaign.

UK Hospitality called for a digital services tax to be levied on online business such as Amazon. It also wants taxes on out- oftown warehouses bolstered to match those levied on town centre shops. Kate Nicholls, the group’s chief executive, said rates were ‘one of the most significant’ reason for closures, adding that 6,000 food and drink sellers had shut in the past 12 months.

The hospitality sector, which is responsible for 2.5pc of eligible economic activity, pays around £3bn in business rates.

There have also been 5,800 shop closures this year, or 22-per-day – more than double last year’s rate.

There are fears the closures are creating ghost towns up and down the country, with high streets that will never recover.

Retailers and the hospitality industry, which has an annual turnover of £130bn in the UK, have argued that business rates unfairly burden firms that have physical premises. The tax has increased well beyond the rate of inflation since it was introduced 30 years ago, while other business taxes have reduced.

The Conservative Party pledged to launch a review on business rates this week, with the aim of reducing the overall burden of the tax. However, there was little detail on what changes would be made and critics pointed to several similar reviews held in the past decade that did not lead to significant change.

Nicholls said: ‘The business rates system is not fit for purpose – the world has changed out of all recognition. Hospitality is the sector most acutely discriminated against by business rates, paying over £3bn.

‘There is a fundamental need to readjust the business tax system unless the Government wants to see the disappearance of physical businesses that do so much to create a sense of community spirit through the country.’

UK Hospitality’s proposal for rates reform would see the introduction of a digital sales tax, which is also supported by the bosses of Tesco and Co-op. They also demand that the rates applied to warehouse space, used by online giants such as Amazon, are adjusted to reflect the value of goods passing through them.

Some of the high-profile closures in the hospitality sector over the past year include Jamie Oliver’s Italian chain, which went bust in May, Gourmet Burger Kitchen, which closed 24 restaurants, and Carluccio’s, which last year shut 34 restaurants.

The casual dining sector has been hit by rising rent, energy and wage bills, as well as food price inflation caused by the falling pound.

The number of restaurants falling into insolvency in the year to the end of June 2019 increased by a quarter to 1,412 compared to 2018, according to research by the accountancy firm UHY Hacker Young.

Some experts have also pointed to large companies that expanded too fast now being forced to reduce the number of outlets they have.