Business rates

This tax places a disproportionate burden on the hospitality sector. We estimate that the sector overpays by £1.8 billion per year compared to its turnover. This is not sustainable and is leading to the demise of leading operators and more broadly the Great British high street.

Position: The business rates system needs fundamental reform across the UK, taxing business rather than simply property; the 2021 revaluation should be sympathetic to the plight of high street businesses, particularly in hospitality; the appeals system in England must be dramatically improved.

Digital business taxation

The Government needs to look more widely at how tax can be levied to support the delivery of local and national services. The growth in the online economy – from retail, services such as banking and social interaction – has skewed business activity away from the tax system. This needs to be rebalanced to avoid the destruction of the tax base and community businesses.

Position: Government should introduce a digital revenue tax that offsets the burden of business rates on property-based businesses.

VAT

The UK is one of the few countries in Europe that does not have a reduced rate of VAT for the hospitality sector. It has been widely introduced as a measure to boost tourism and to grow the economy. We believe that its introduction would lead to thousands more jobs, economic growth, a boost for Treasury revenues and an improvement in the UK’s tourism balance of payments.

Position: The Government should urgently consider, and introduce, a reduced rate of VAT for the hospitality sector.

Alcohol excise duty

Excise duty is a tax paid by alcohol producers on the amount of alcohol they produce for consumption. This is inevitably passed onto hospitality businesses who pick up the cost or pass it onto the consumer. This makes drinking out more expensive and supports the differential between drinking out and drinking at home.

Position: Alcohol excise duties should be kept to a minimum; Treasury should consider amendments to the excise duty regime that promote out of home consumption, such as a reduced rate for draught beer.

Tourist tax

Several local authorities have proposed local tourist taxes to generate local income. These have principally been focused on levying an additional charge for each night each person spends in a hotel or other accommodation provider. The argument ignores the fact that UK accommodation providers already pay amongst the highest VAT and property taxes in Europe, and that this will deter tourist visits further.

Position: National Governments should not devolve powers to local authorities to introduce local tourist taxes; local authorities should examine other means to raise local revenue to support tourism.