Cutting VAT to 5% for the sector would cost the Exchequer between £11bn and £12bn per year in lost revenue, according to Government estimates.
Treasury minister David Gauke was asked about the cost of such a move by Andrew Griffiths MP, the chairman of the All-Party Parliamentary Beer Group.
In a written answer, Gauke said: “Based on ONS data from 2012, the revenue foregone by reducing VAT to 5% on all hospitality (which includes rooms, food and alcohol) would have an estimated cost of £11 billion to £12 billion a year to the Exchequer.”
Earlier this year Griffiths said the campaign to reduce VAT for the sector, which is headed by Jacques Borel and supported by several major pub operators and bodies, is “destined to fail”. In response, JD Wetherspoon chairman Tim Martin said Griffiths “shows a complete lack of understanding of the economic case for tax parity”.
