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Mike
Weatherley : Threat of restaurant & take-away tax on (area)’s
residents Labour calls for new ‘minor
taxes’ in town hall finance shake-up Mike Weatherley, Conservative Prospective Parliamentary Candidate for Hove and Portslade, expressed concern that the Government is considering introducing a new restaurant tax and take-away tax as part of Gordon Brown’s review of town hall finances. Documents from top Labour councils submitted to the review – being chaired by former Labour councillor and Brown supporter, Sir Michael Lyons – call for new taxes to be levied on eating out, to boost local authorities’ powers to rake in money.
Such taxes would potentially be accompanied a new tax on hotels. The leisure and hospitality industry is already expressing alarm at these ‘bed tax’ plans. Mike commented: “Dining out, whether at a restaurant or pub, is no longer the preserve of the well-off. In recent years, there has been a dramatic improvement in the quality and range of restaurants in Britain and across Hove and Portslade. Yet I fear that this high street resurgence will be choked off by a new plate tax and take-away tax. “The Treasury are eyeing up the popularity of eating-out and now want to cash in. Gordon Brown’s greedy government just wants to grab even more money from people’s pockets via new stealth taxes. We need to vigorously oppose these plans before they get momentum. “Most people, already facing soaring council taxes and utility bills, will find a levy on their Chinese take-away, fish and chip supper or sit-down meal hard to swallow. Under Brown, taxes have gone up and up, without the improvements in public services in Hove and Portslade that we all want to see.”
Notes to Editors BED
TAX AND PLATE TAXES ON AGENDA The
Government is currently conducting a review into local government
finance which will report by the end of 2006. This review was
commissioned by Gordon Brown and John Prescott, and is headed by former
Labour councillor, Sir Michael Lyons. Sir Michael Lyons previously sat
on Gordon Brown’s review of the location of government departments. http://www.hm-treasury.gov.uk/consultations_and_legislation/lyons/consult_lyons_index.cfm The
final report in town hall finances will be published at the end of this
year. The interim report in December suggested: “The
most frequent proposal was for a local tax on hotel and similar
accommodation… I also received research commissioned by the
Association of London Government on the options for levying taxes on
restaurants, entertainment venues and sporting events... I am interested
in exploring this issue further” Lyons
Inquiry into Local Government, Consultation Paper and Interim Report,
December 2005, p.76-77. http://www.lyonsinquiry.org.uk/index.php?leftbar=pubs HEAVY
LABOUR LOBBYING FOR NEW LOCAL TAXES The
Association of London Government, which represents London boroughs, has
been lobbying the review to introduce new ‘minor’ taxes. Its
follow-up submission in April 2006, approved by the ruling Labour
administration on the body, asserted: “The
ALG supports the proposal that local authorities should have access to a
wider range of local taxes and charges. The Association therefore
welcomed the increased flexibility arising from the Local Government Act
2003, which allows local authorities to set charges to cover costs of
discretionary services and gives them more freedom to trade. There may
be a range of other ‘minor’ local taxes” ALG,
Response by the Association of London Government to the Lyons Inquiry
Consultation Paper and Interim Report, April 2006. http://www.lyonsinquiry.org.uk/submissions/20060426%20ALG%20Response%20to%20Interim%20Report%20A.pdf Following
the May 2006 local elections, the ALG is now no overall control. The ALG
is funded by London boroughs – and has commissioned detailed work at
the local taxpayers’ expense on these new local taxes. HOW
THE LABOUR RESTAURANT AND TAKE-AWAY TAX WILL WORK In
its detailed submission to the Inquiry, the ALG have outlined how such a
tax will work. They assert: Restaurant
tax “A
tax on restaurant eating would fit well into a package of measures to
tax tourists’ activities without placing an undue burden on one
particular aspect” (para 4.34). “Research
suggested total expenditure on eat-in meals from restaurants and pubs of
around £8 billion. A supplement of, say, 6% would yield around £500
million. As with a tax on hotel accommodation, this would represent
only a small proportion of total local government expenditure and
therefore could be deemed a ‘minor tax’.” (para 4.36). “A
percentage supplement to each meal makes most appeal for the form of the
tax. Definition would not be a problem, but the large number of premises
selling both eat-in and take-away food suggests that the tax would work
best if set at the same rate for both” (para 4.50). Take-away
tax “A
new tax on take-away food would yield more than that for accommodation
or restaurant food if taxed at the same rate, but even a rate of 10%
would still leave the tax as ‘minor’, yielding around £1 billion
in England” (para 4.55). “A
take-away tax could be introduced on its own given the strong link to
costs, but our view is that introducing it alongside a restaurant tax at
the same rate would solve many definition problems and avoid any
distortion of trade between the two streams” (para 4.61). “On
balance, a percentage supplement to each meal is our recommended form of
the tax” (para 4.62). “There
are no particular issues about setting, collecting or distributing the
tax; it would be stable and relatively buoyant. The tax would, however,
be less progressive than a restaurant tax but could be defended if it
were introduced alongside the more progressive restaurant tax” (para
4.63). Association
of London Government, Exploring the scope for minor local taxes, 2005. http://www.alg.gov.uk/upload/public/attachments/471/Stage%202%20report%20Final.pdf GROWING
POPULARITY OF EATING OUT -
Analysis by the Office of National Statistics last month found that
consumers spent £88 billion on food and drink in restaurants, pubs and
takeaway meals in 2004, double the figure spent in 1992. Office
of National Statistics press release,
‘Spending on eating out overtakes meals at home’, 18 August 2006. http://www.statistics.gov.uk/pdfdir/ioa0806.pdf -
A study by research group, Mintel, in April observed that, “eating out
is now truly ingrained within the British culture with the majority of
consumers eating out on a regular basis. It is an important aspect of
social habits whereby consumers can maximise their free time by eating
and meeting with friends and family at the same time. The increased
frequency and informality of dining out has been made possible by two
key factors. Eating out has firstly become a cheaper and more low-key
affair and consumers have become better off. This is not to say that
eating out is no longer a special occasions since the market clearly
offers a spectrum from premium restaurants of notoriety to casual dining
outlets that provide more everyday fare.” Mintel,
Restaurants – UK, April 2006. RESTAURANT
TAXES ABROAD Restaurant
taxes are common in the United States and Europe. -
For example, in France, VAT is levied at 19.6% on restaurant meals. The
French Government has been trying to reduce its unpopular VAT rate on
restaurant meals, but has been blocked by the European Union. http://www.iht.com/articles/2006/01/24/business/euecon.php -
In Las Vegas, there is a 7.25% on restaurant and take-away meals, in
Columbia 10% and in Washington state, 9.3% on restaurants and coffee
shops. http://en.wikipedia.org/wiki/Sales_taxes_in_the_United_States http://www.iexplore.com/cityguides/Nevada/Las+Vegas/Dining EFFECT
ON LOCAL GOVERNMENT FINANCES As
the label of a ‘minor tax’ suggests, a restaurant and fast food tax
could not raise enough money to cut the level of council tax. Even if it
raised £1.5 billion, this pales into insignificance compared to the
fact that council tax currently raises £19 billion in England, and
government grants to local government represent £62 billion on top.
The Government would be likely to cut government grants to
compensate for the additional revenue to councils, turning a local tax
into a central ‘stealth’ tax for the Treasury. 07 October 2006
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