In its latest report, entitled Leveling the bar: reforming outdated commercial tariffs for the survival of pubs, the APPBG describes the current corporate pricing system as an “outdated tax” that “presents a clear and current threat” to the livelihoods of pubs.
Ahead of the Chancellor’s Spring Statement on Wednesday March 23, the report calls on the government to urgently address the inequity of commercial rates in the system, saying it threatens the future of pubs and their communities as online giants continue to deflect the taxman.
According to the report, the average pub pays 3% of its revenue in fares alone, with some paying as much as 10%. Meanwhile, online retailer Amazon has paid a total of 2% tax on its 2020 turnover of nearly £21billion. In response, MEPs are recommending the introduction of a tax on online sales so that the booming digital sector bears its fair share of the tax burden, with the funds raised being used to reduce the costs borne by physical businesses.
It also calls for a new specific rate multiplier for pubs, closer to the 1990s level of 32 pence per pound of rateable value, to reflect the wider contribution pubs make to maintaining and investing in their communities.
“UK pubs are at the heart of the community,” says Mike Wood MP, Chairman of the APPBG.
“Never more than since the pandemic, when their fundamental place in society has been crucial.
“The burden of professional pricing falls disproportionately on pubs in a rating system mired in complexity and opacity, where online giants are not paying their fair share.
“Urgent action is needed, and I call on the Chancellor in his spring statement… to help us level the playing field and reverse years of stealth corporate rate hikes, which threaten to bring a sector so essential to economic and social recovery on its knees.
Elsewhere, the report also notes that tariff relief and other Covid support have been “lifelines” for community pubs during the pandemic, but cites data from the British Beer and Pub Association (BBPA) according to which one in 10 tax collectors now think their business is not viable. He goes on to warn that if support is withdrawn without reform to the business pricing system, around 20,000 UK pubs could be at risk.
With rising utility costs cutting the lifespan of pubs, the report says the government should help ensure their survival by increasing support for small businesses to include more community pubs. It also calls for greater transparency and resources from the Rating Office Agency to support the current pub rating system.
In response to the APPBG report, Emma McClarkin, Chief Executive of the BBPA, reiterates that corporate rate reform is necessary to create a fair system that takes into account how the economy works today.
“The current corporate pricing system places a disproportionate burden on pubs and brewers, stifling their recovery and return to sustainable growth,” she says.
“We welcome this timely report from the All-Party Parliamentary Group on Beer following our submission to its inquiry, and hope that its recommendations will be given serious consideration by the Chancellor ahead of this week’s spring statement.
“Pubs and brewers are at the heart of our communities and will help foster social cohesion as we reconnect and recover from the pandemic, and so it is now essential that our sector receives the support it needs so that we can can create jobs and additional economic value. across the UK, to ensure the whole country is upgraded.