The Scottish Licensed Trade Association (SLTA) has called on the UK Tory Government to reduce the rate of Value Added Tax (VAT), to help hospitality businesses deal with soaring inflation.
Such measures have long been implemented across much of Europe to maintain international competitiveness.
Following a temporary reduction to 5% in July 2020, later going up to 12.5%, the UK Government reimposed the standard rate of 20% in April.
Official data showed that Consumer Prices Index (CPI) inflation rose to 9.4% in June, up from 9.1% in May to the highest level since February 1982.
Colin Wilkinson, the managing director of the SLTA, said:
“The temporary reduction of VAT from 20% to 5% from July 2020 to support businesses during the pandemic was hugely appreciated by the hospitality industry, but its return to the standard rate from 01 April has coincided with an unprecedented rise in inflation and also food and energy costs.
“Businesses are struggling so it goes without saying that their customers are struggling, too.
“After enforced closures and restrictions during the pandemic, the spiralling cost-of-living crisis and ongoing staffing issues are now having an impact on licensed hospitality.
“Many businesses no longer open seven days or they open later in the day because of rising energy costs and lack of staff so a cut in VAT would go a long way to helping them on the road to recovery and provide much-needed support over what will be a very difficult few months.”
Kenneth Gibson MSP commented:
“Employing some 220,000 workers and accounting for 8.6% of all jobs, hospitality is a hugely important contributor to the post-COVID recovery of the Scottish economy.
“Hospitality businesses are dealing with increased outgoings on top of the impact the cost-of living crisis has on people’s ability to go out and spend money. Such businesses are forced to pass rising costs on to consumers, potentially losing business, which is bad for all parties involved.
“We know that once the lovely café on the corner goes under, it may be lost forever.
“The Tory Government should reduce VAT on fuel to ease pressure on our vital hospitality sector and alleviate the very real difficulties that households and businesses currently face.”
ENDS
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