The VAT Campaign has written to 40 conservative MPs stressing the benefits of reducing VAT in pubs and restaurants and its potential to boost the economy in the wake of the Brexit vote.
The campaign, supported by the Association of Licensed Multiple Retailers (ALMR) and the British Beer and Pub Association (BBPA), believed that leaving the European Union will have a positive effect on its chances of a VAT reduction.
Both associations have briefed MPs who have previously expressed support for a VAT reduction within the hospitality industry, pointing out the renewed potential.
The VAT Campaign’s lobbyist Chris Guyver said that Brexit had huge, potentially positive implications for the pub, restaurant and hospitality industry.
He added: “Consumer confidence is strongly correlated to the extent people go out to eat and for a drink.
“If expert prediction is correct and the UK falls into recession, then it would be logical for a new government to mitigate the effects of a downturn in the sector by using its new tax levying freedoms to reduce the fiscal burden on the hospitality sector.
“VAT is regulated at EU-level. It is compulsory to have a rate of at least 15% and the vast majority of the details of system are governed via Brussels Directives.
“The UK can now decide whether to keep VAT and, more importantly perhaps whether to change the system.”
ALMR chief executive, Kate Nicholls, said: “A new VAT rate specifically for pubs and restaurants can now be designed in a manner that minimises the initial cost to Treasury while maximising the benefit for pubs and restaurants, putting money back in consumers’ pockets and helping to secure vital jobs and creating many more.
She added: “The obvious solution would be for the government to reduce the VAT applying to the sector, bringing tax rates levied on hospitality more into line with other sectors of the economy.”
BBPA chief executive, Brigid Simmonds, said that a drop of the VAT rate to 15% would create 78,000 jobs.
She said: “There is now a real opportunity to tackle unfair VAT rates in the hospitality sector which would be a major benefit to pubs and create thousands of new jobs.
“I hope the government makes this a priority.”