Pub chain JD Wetherspoon remains "cautious" as it readies itself for the impact of a £50m tax bill, the company said today.
Like-for-like sales in the year to date (39 weeks to 22 April) were up 2%, but the pubco reiterated its concerns about high taxes in a Q3 trading update.
It said that the pub industry had been burdened with "considerable additional taxes" in the recent Budget, adding that as well as excise duty, a change in allowances for fruit/slot machines has added £2m a year to Wetherspoon's tax bill.
The Government's recently introduced ‘late-night levy', which Wetherspoon described as "another tax", will also cost the firm about £2m a year.
"The main challenges for the company, in this financial year of 53 trading weeks, will be the continuing cost pressures resulting from government legislation, including recent increases in excise duty, business rates and carbon tax," the group said in its statement.
The pubco went on to criticise the difference between the taxes paid by the hospitality industry and retail, citing that while pubs pay 20% VAT on food sales, supermarkets pay "virtually nothing", which it described as bad for jobs and taxes.
"The overall level of taxes and the disparity with supermarkets has greater economic effect in less affluent parts of the UK," it said. "The result is that the majority of prominent pub and catering companies are investing in the southern part of the UK and in major town and city centres elsewhere, contributing to serious economic problems for many high streets in Britain and Northern Ireland."
Wetherspoon is one of a number of pub and catering businesses, including Fuller's, Robinsons, Shepherd Neame and Thwaites, that have joined the ‘VAT Club', headed by Jacques Borel. They are urging the Government to reduce VAT for the hospitality industry, along with many other countries, in order to generate additional jobs and taxes for their economies.
Wetherspoon has opened 29 new pubs and closed two pubs, since the start of the financial year, with several sites still under development. It plans to open around 40 pubs in the current financial year, but the firm's expansion strategy has slowed down for the next financial period, with 20 to 30 pubs planned.
"We continue to be slightly more cautious about the potential outcome for the current financial year," the group said.
By Janie Manzoori-Stamford
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