Jul 15, 2020
Firms start price cuts as £4bn VAT boost begins
A £4bn cut in VAT has come into force, allowing firms in the food, drink and hospitality sectors to slash prices. Starbucks and McDonald's are the latest firms to promise reductions after the chancellor ordered a temporary VAT cut from 20% to 5%. The Treasury estimates households could save £160 a year on average, but not all firms may pass on the benefit. VAT - Value Added Tax - is paid on multiple everyday goods and services, but the tax is usually included in price most consumers see. Paul Pomroy, McDonald's chief executive for UK and Ireland, said he hoped the price cuts being introduced were a sensible balance between boosting consumer demand and supporting franchisees in getting staff back to work. "Wetherspoon chairman Tim Martin has campaigned for tax equality between pubs, restaurants and supermarkets for many years. He said:"Supermarkets pay no VAT on food sales and pubs pay 20%. Supermarkets pay about 2p per pint of business rates and pubs pay about 20p. He said: "A VAT reduction will help pubs and restaurants reverse this trend - creating more jobs, helping High Streets and eventually generating more tax income for the government."
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