Remove Tax on Alcohol in Pubs
Every day 2 pubs are forced to permanently close in the UK.
It's time to Save Our Pubs.
Unite UK is proposing the removal of tax on alcohol served in traditional pubs as part of a broader strategy to support local areas and preserve cultural cornerstones of communities. This policy aims to revitalise local social scenes, protect jobs, and preserve the cultural role of pubs in the United Kingdom.
Supporting the Hospitality Industry:
Pubs have been an integral part of British culture for centuries, serving as social hubs in communities across the country. However, the hospitality industry has faced significant challenges in recent years, particularly due to the economic impact of the COVID-19 pandemic. Many pubs have struggled to remain profitable, with a significant number forced to close permanently. 769 in 2023 to be precise.
By removing the tax on alcohol served in pubs, this policy aims to provide immediate financial relief to the landlords. This will help pubs reduce their operational costs, attract more customers, and ultimately, increase their profitability and sustainability.
Boosting Local Economies:
Pubs contribute significantly to local economies, providing employment opportunities and supporting local suppliers. By making alcohol more affordable for consumers, the removal of tax will likely increase patronage, leading to higher sales and more robust local economies.
Increased activity in pubs can also have a positive knock-on effect for other local businesses, such as breweries, food suppliers, and entertainment venues, further supporting economic growth at the community level.
Encouraging Social Cohesion and Cultural Preservation:
Pubs play a crucial role in fostering social interaction and community cohesion. They serve as gathering places where people from diverse backgrounds can come together, share experiences, and build connections. In many rural and urban areas, the local pub is one of the few remaining community spaces.
By making it more affordable to enjoy a drink at the pub, this policy encourages people to choose pubs over less-regulated environments like home drinking, which can be associated with higher risks of excessive alcohol consumption and isolation.
Key Components of the Policy
Removal of VAT on Alcohol Served in Pubs:
The primary component of this policy is the removal of Value Added Tax (VAT) on alcohol served in pubs. Currently, VAT on alcohol in the UK is set at 20%, which adds a significant cost to each drink sold. By removing this tax, the price of alcohol served in pubs will decrease, making it more affordable for consumers and increasing the competitiveness of pubs relative to other drinking environments.
Scope and Duration:
The VAT exemption will apply to all alcoholic beverages served in licensed pubs, including beer, wine, spirits, and cider. The policy will be implemented as a permanent measure, with provisions for periodic review to assess its impact on the industry and public health.
Public Health Campaigns:
Alongside the tax removal, the government will launch public health campaigns aimed at promoting responsible drinking. These campaigns will focus on educating consumers about safe alcohol consumption levels, the risks associated with excessive drinking, and the importance of moderation.
Partnership with Pubs:
Pubs will be encouraged to participate in these public health initiatives by promoting non-alcoholic options, offering water alongside alcoholic beverages, and training staff to recognize signs of excessive drinking.
Monitoring and Evaluation:
Economic Impact Assessment:
The policy will include a robust monitoring and evaluation framework to assess its impact on the hospitality industry, local economies, and public health. This will involve regular data collection on pub sales, employment levels, and alcohol consumption patterns, as well as consumer surveys to gauge public response.
Cost Implications
The removal of VAT on alcohol served in pubs will have several cost implications, both for government revenue and for the hospitality industry:
The current VAT rate on alcohol is 20%. In 2019, the total VAT revenue from alcohol sales in the UK was estimated to be around £12 billion​. The removal of VAT on alcohol served in pubs would reduce this revenue by approximately £2 billion annually, considering that pubs account for about 16-17% of all alcohol sales in the UK.
To offset this reduction in revenue, the government could consider adjusting tax rates in other areas, increasing duties on off-licence alcohol sales, or reallocating budgetary resources. Additionally, the policy’s potential to boost pub sales and employment may lead to increased income tax and corporate tax revenues, partially compensating for the loss.
Impact on the Hospitality Industry:
Pubs are expected to benefit significantly from the tax removal, with the potential for increased sales and profitability. The reduction in prices may also attract more customers, leading to higher overall sales volumes.
The policy could also encourage investment in the hospitality sector, with pubs reinvesting increased profits into improving their facilities, expanding their offerings, and hiring more staff. This would contribute to job creation and economic growth at the local level.
Long-Term Benefits
Revitalisation of the Hospitality Sector:
By reducing the financial burden on pubs, this policy will help to stabilize and revitalize the hospitality sector. Pubs that have been struggling to remain profitable may find renewed success, leading to fewer closures and more opportunities for employment and community engagement.
A thriving pub sector also contributes to the UK’s tourism industry, as pubs are an integral part of the country’s cultural appeal.
Promotion of Social Cohesion:
Pubs have historically been spaces where people of all backgrounds can come together, fostering a sense of community and social cohesion. By making it more affordable to drink in pubs, the policy encourages people to choose these social environments over drinking in isolation, which can contribute to loneliness and related social issues.
The promotion of responsible drinking within pubs, coupled with public health campaigns, will help to mitigate the risks associated with alcohol consumption while preserving the social benefits of pub culture.
Economic Growth and Job Creation:
The increase in pub patronage resulting from lower prices is expected to lead to higher sales, more employment opportunities, and greater economic activity in local communities. The ripple effect of a healthier pub sector will benefit a range of associated industries, including brewing, agriculture, and entertainment.
The policy also aligns with broader efforts to support small and medium-sized enterprises (SMEs), which make up the majority of the pub industry. By reducing their tax burden, the policy will help these businesses to thrive and contribute to the UK’s overall economic growth.
Unite UK’s proposal to remove tax on alcohol served in pubs is a strategic initiative designed to support the hospitality industry, promote social cohesion, and stimulate local economies. While the policy will result in a reduction in government revenue from VAT, the long-term benefits, including the revitalization of pubs, job creation, and enhanced community engagement, are expected to outweigh the costs.
We call on all political parties, stakeholders, and citizens to support this policy. By working together, we can ensure that the UK’s pub culture continues to thrive, benefiting both local communities and the nation as a whole.