Pub boss urges level playing field
JD Wetherspoon chairman Tim Martin called for a level playing field for pubs after revealing his firm paid £600 million in tax over the last year.
The pub giant grew underlying pre-tax profits by 3.1% to £79.4 million in the year to July 27, but Mr Martin said pubs continued to be at a disadvantage as supermarkets do not have to pay VAT on food sales and are effectively able to subsidise alcohol prices.
Mr Martin said: "This serious economic disadvantage has contributed to the closure of many thousands of pubs, and the pub industry has lost approximately 50% of its beer sales to supermarkets since VAT was increased from 8% over 30 years ago."
Wetherspoon's tax bill rose by £48.7 million and now equates to 43% of its £1.4 billion in sales, with VAT accounting for £275 million. The tax cost is e quivalent to £662,000 per pub.
Mr Martin added: "We continue to believe that pubs are taxed excessively and that the Government would create more jobs and receive higher levels of overall revenue, if it were to create tax equality among supermarkets, pubs and restaurants."
The company increased its headcount by more than 3,000 to 34,000 last year and paid £29.2 million in bonuses and free shares to employees, the majority of which work in its pubs.
Wetherspoon now has 927 pubs after opening 46 new sites in the last financial year, with another 30 to 40 sites due to open in the current period.
Wetherspoons is supporting Tax Equality Day on September 24 when the industry will cut prices by about 7.5% to reflect the likely reduction in prices which consumers would see if VAT in pubs was brought down.
Mr Martin, who founded the business in 1979 and became chairman in 1983, also took aim at the demands of corporate governance 'best practice', which he said created boards that tended to be excessively influenced by City fashions, creating instability and poor performance as a result.
He pointed out that compliant companies, with an independent non-executive chairman and dominated by non-executive directors, often fared disastrously in comparison with non-compliant ones.
Mr Martin added: "The road to hell in pub companies lies in emphasising the views of shareholders over those of employees on the front line."
Shares rose by more than 1% today after the company gave an encouraging update on trading at the start of the new financial year, with like-for-like sales up 6.3%.