JD Wetherspoon has urged the government to allow pubs to compete on the same level as that of supermarkets by subjecting them to the same tax rates as that of the pubs, as it posted rising sales but falling profit for the first half owing to heavy tax bill. The group which owns 800 pubs across the UK reported that it paid a total of £273.5m in taxes in the six months to January 27, a £23.4m increase on the previous year, and 10.7 times the company’s profits.
Grousing the heavy tax bill, JD Wetherspoon claimed that its tax bill would have been £40.7m lower if it benefited from the same tax regime as supermarkets, which pay “virtually no VAT” on food sales. Like-for-like sales at JD Wetherspoon rose 6.9% during the half-year but operating profit dipped 2% to £52.1m as margins came under pressure from the £23.4m increase in taxation and higher labour, utilities and food costs. Pre-tax profit rose to £34.8m from £33.2m during the same period in 2012. JD Wetherspoon, which employs around 30,000 staff, ended the half-year period with 865 pubs and expects to open 30 pubs over this financial year.
About falling profits at JD Wetherspoon, Tim Martin, chairman and founder of the group said in a statement, “The outcome for the first half of the financial year was reasonable, given the pressures on the UK consumer. As previously stated, the biggest danger to the pub industry, is the VAT disparity between supermarkets and pubs and the continuing imposition of stealth taxes, such as the late-night levy, and the increase in fruit/slot machine taxes.”