Campaigners warn new ‘taxi tax’ could lead to five million fewer trips to restaurants and pubs a year

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Britons could make 5 million fewer journeys to pubs and restaurants due to the government’s “taxi tax”, dealing a devastating blow to the hospitality business because it recovers from the pandemic, campaigners have warned.

Minicab companies throughout the UK could quickly have to add VAT to their fares beneath new authorities laws that could see the worth of a journey rise by 20 per cent as individuals and companies proceed battling inflation and the price of residing disaster.

Campaigners, citing business information, mentioned 15 million individuals took a minicab journey to a pub, bar or restaurant final year.  But new YouGov analysis confirmed a third (33 per cent) of individuals can be much less seemingly to accomplish that if costs elevated by 20 per cent.

The analysis comes after the High Court dominated in October final year that taxi companies, reasonably than drivers, had been answerable for contracts with their prospects, which means they could be answerable for charging VAT on fares.

Under present guidelines minicab firms don’t pay the tax as a result of drivers are classed as impartial, self-employed contractors who don’t meet the required earnings threshold of £85,000 per year.

The ruling might also have an effect on newer firms resembling ride-hailing apps Uber and Bolt in addition to extra conventional, impartial taxi companies.

The taxi business is looking on the federal government to change the legislation in order that taxi drivers are exempt from VAT – a tax that hits poorer individuals tougher as a result of it takes no account of 1’s skill to pay.

But it’s unclear whether or not the federal government will scrap the tax, which might internet the Treasury tens of millions of kilos in extra income at a time when public providers just like the NHS are struggling.

Campaigners cited YouGov polling that discovered practically 7 in 10 adults (68 per cent) had been towards the worth hike, with a couple of in 4 saying it made them “angry”.

Gareth Cadwallader, spokesperson for the Stop the Taxi Tax marketing campaign, mentioned: “Brits love their locals and our industry plays a key role in safely getting punters to and from home during a night out. The taxi tax will make this unaffordable for many, hurting an industry already struggling with millions fewer trips to the pub every year.

“The taxi tax needlessly undermines the recent support the government has given the hospitality industry. It is giving with one hand and taking away with the other.”

He added: “The government must take action now. The prime minister should see that going into an election with plans to raise the cost of punters getting a taxi home from the pub could see them losing valuable votes from everyone who loves a pint in their locals.

“He must act urgently in the interests of businesses and passengers who want to be able to afford a night out.”

Emma McClarkin OBE, CEO of the British Beer and Pubs Association, mentioned: “Pubs are already under strain and the taxi tax will increase travel costs to the point that many will choose not to go out at all – directly impacting establishments across the country.

“Pubs are essential to communities and need government support – another tax would just further erode revenues and drive customers away. We have joined the ask for urgent action now.”

Michael Kill, CEO of the Night Time Industries Association, mentioned: “The taxi tax is the last thing the night time industry and hospitality sector needs and only adds to the enormous pressures that businesses up and down the country face.

“It is disappointing the chancellor is dragging his heels on this. Jobs and livelihoods are at stake. We need action, not more delay.”

Jonathan Gullis, the MP for Stoke-on-Trent North, mentioned: “It makes no sense to burden people and businesses with a needless new tax, especially in an election year. The impact on pubs, bars and restaurants – who are already struggling with inflationary pressures – and communities across the country will be very serious indeed.

“As a party, we are shooting ourselves in the foot by talking about lowering taxes at the Budget while raising them in other areas. The taxi tax is deeply un-Conservative and I urge the prime minister and chancellor to intervene urgently to back businesses in cities like Stoke-on-Trent.”

A Treasury spokesperson mentioned: “The High Court ruling does not change the tax position, it remains the case that fares are liable to VAT at the standard rate.

“However we are considering carefully the implications of the High Court ruling including the challenges it raises, and we aim to publish a consultation shortly.”