New British Prime Minister Andy Burnham announced that from April 2027, local taxes on pubs, clubs and live music venues will be reduced by 20 percent. This is the third economic measure presented by the new British government within three days, Reuters reported, quoted by BTA.
“This government will support the businesses that people want to see in their communities“, Burnham said.
According to government data, the reduction will save an average of about 1,100 British pounds per pub next year, benefiting nearly 32,000 establishments. The measure will cost the budget around 100 million British pounds a year.
It is expected to benefit both independent establishments and chains such as „J D Wetherspoon“ (J D Wetherspoon), „Marston's“ (Marston's) and „Fuller, Smith & Turner“ (Fuller, Smith & Turner).
However, the government did not announce tax breaks for the rest of the restaurant and hotel sector, nor a reduction in sales tax, which the industry is demanding.
The chief executive of the industry organization „UK Hospitality“ (UKHospitality) Alan Simpson welcomed the decision but called for wider reform of local property taxes.
“Restaurants are struggling just like pubs, and hotels are facing an average 110% increase in local property taxes,“ he said.
Chancellor John Healy, who also took office this week, said he intended to take further steps to cut costs for UK businesses to help overcome pessimism about the economy.
He said a strong investment sector was key to economic growth and the cabinet's policy would remain within fiscal rules, which require current government spending to be financed by revenue rather than new debt.
The tax cuts will be funded by reviewing tax breaks for certain types of businesses, including vape shops products, as well as by strengthening tax control over companies that sell through online platforms.
Burnham has previously raised the issue of higher taxation of warehouses used by companies such as “Amazon“ (Amazon) to support traditional retail outlets, but such a measure is not yet included in the cabinet's program.
The new prime minister is seeking to improve relations with business, which in recent months has expressed concerns that higher labor, energy and wage costs are limiting investment and growth.
Additional pressure on British companies is also being exerted by renewed tensions in the Middle East, which has raised concerns about further energy price increases and a possible increase in interest rates.
According to a study published this month, 23 percent of companies in the hotel and restaurant sector are operating at a loss, and 5 percent are no longer economically viable.
Since taking office on Monday, Burnham has also announced plans to remove a certain tax from household electricity bills and introduce a cap on bus fares.
Despite the government's assurances for fiscal discipline, the yield on 10-year British government bonds rose to its highest level since May 20, Reuters notes.