THE UK hospitality industry would create more than 400,000 new jobs in three years if the Treasury slashed the rate of VAT paid by operators to 10 per cent, research has suggested.
The claim is made in the latest report by the VAT Club Jacques Borel, a campaign led backed by some of the biggest names in the UK leisure, brewing, drinks wholesale and pub trades.
The report, which will be submitted to the Treasury in October, claims 425,000 roles in the pub, restaurant, catering and tourist sectors will be created if VAT is reduced from 20 per cent to 10 per cent in the next three years.
And it contends a further 150,000 jobs would follow if VAT is then reduced by a further five per cent.
The campaign is led by veteran French lobbyist Jacques Borel, and backed by players such as Pizza Hut, Heineken, TGI Friday, Matthew Clark and JD Wetherspoon.
It concedes that tax receipts would initially fall after the VAT cut is made.
But it argues that the reduction would quickly stimulate the sector by allowing outlets to lower prices, making it more attractive to customers.
The extra revenue brought in would in turn give operators the confidence to invest in their outlets and take on more staff, argues the campaign, which claims the growth of the sector would result in the Treasury having a £111 million surplus from VAT receipts after three years.
Mr Borel, who has secured VAT cuts from similar campaigns in France, Finland, Germany, Belgium, Sweden and Ireland, said reducing the tax paid by operators would level the playing field between the on-trade and the major grocery multiples.
He said: “The high rates of VAT applying to pubs, restaurants, hotels and catering businesses in the UK is restraining the growth of the UK hospitality industry.
“By lowering the rate of VAT in the sector, the government will reduce the unfair competition from supermarkets which benefit from the zero VAT rates that apply to the food it sells and which is used to subsidise the sale of alcoholic drinks.
“Our experience of VAT cuts in other EU countries shows that operators reduce their prices and customers respond to those lower prices with increased demand.”
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