Even the most gormless of Labour politicians don’t try to persuade the electorate that taxation is a privilege – a glorious, much cherished opportunity to contribute to the greater good. Implicitly punitive, taxes are often levied on things that government wishes to discourage: smoking; drinking; latterly, carbon emissions. It follows that governments with severe, progressive tax regimes hope to discourage success, ambition, optimism, self-confidence, calculated risk-taking and a functional economy. That’s the big picture, but let’s get into the British weeds.
Under this government’s guidance, HMRC is undertaking a revaluation of British pubs. The idea is to raise business rates on those establishments that turn out to be located in appallingly ‘attractive locations’ – with, say, a nice view – or in suspiciously appealing ‘character properties’ – that is, in cozy, storied premises with wooden rafters and leather banquettes, rather than in cheap new-builds with sticky floors and a funny smell.
As one of the great improvements to the boozer since I first visited Britain in the 1970s has been an upgrade of the menu from salt and vinegar crisps and pickled eggs to a proper meal with miso butter, those gastropubs deemed to have ‘premium-priced menus’ and ‘well-planned facilities to maximise food income’ will be hammered. Because serving breakfast, afternoon tea and coffee or late-night drinks also puts you in the crosshairs for a hiked rates bill, pub owners taking the term ‘hospitality sector’ seriously make a big mistake. Ditto those providing car parks or children’s play areas.
Pubs will even be punished for playing ‘an active role in their local communities’
Pubs will even be punished for ‘having a good local following’ and for playing ‘an active role in their local communities’. So, what – if the folks in your area actually fancy gathering at your watering hole with a frequency that makes your business viable, you’re willing to store a set of spare keys behind the counter when neighbours are away and you let your patrons post flyers about car boot sales, that’s a big collective black mark. Still more money to the council.
The flip side: never learn your regulars’ names or their standard tipples, shun doing them small favours and create instead an unwelcoming atmosphere that discourages repeat custom, and your taxes won’t rise. Any investment is penalised and is therefore idiotic.
There’s a good case for nixing the whole extra layer of taxation on corporations and businesses, whose owners and employees will extract profit as income, on which they are taxed as individuals. But the British business rates system is especially absurd – irrational, unfair, arbitrary and gratuitously complex. For pubs, officialdom arrives at a ‘rateable value’ based on estimated turnover – when businesses have measurable, real-world turnovers that needn’t be estimated.
For other businesses, ‘rateable value’ is based on the estimated market rent – when those businesses pay a measurable, real-world rent. Besides, the relationship between rent and profit is often inverse. If your rent is especially high, by what logic should your taxes be especially high – when vicious rents in the south-east make it vastly harder to make money? Why is verifiable profit not the sole target of local taxation?
Instead, this ‘rateable value’, only nominally related to the success of your business (or not related at all), is then subject to a ‘multiplier’, a figure that depends on whether your (purely theoretical) turnover or rent has crossed certain thresholds. Thereafter, individual ‘reliefs’ may reduce your tax burden, if the Chancellor is looking kindly at the source of your livelihood, but there doesn’t appear to be anything systematic about this erratic state pity.
Incredibly, business rates average about half of estimated market rent. I don’t know how anyone running a lone shop, café or pub is surviving. And business rates don’t apply to online enterprises that also economise by not maintaining premises.
This absurd tax system is helping close countless small businesses, accelerating the demise of the high street and ultimately losing councils dosh. Along with many other overburdened enterprises, pubs face escalating costs on all fronts: raised national insurance contributions, the loss of younger, inexperienced workers who could have until recently drawn a lower wage, the same soaring costs of food and energy hitting households. With what the Tories have dubbed the ‘nice pubs tax’, the Chancellor is expecting to raise an astonishing £12 billion in extra revenue.
See stone; extract blood. Two British pubs are closing every day. That rate is 26 per cent higher than a year ago. Since 2000, the number of UK pubs has dropped from nearly 61,000 to 45,000. In towns and villages, the closure of the single remaining pub can be socially catastrophic.
More, the pub is a distinctly British institution. Many of the ‘character properties’ Labour would wallop are historically irreplaceable. The pub is that rare British setting whose protocol encourages patrons to interact – even to talk to strangers. We’ve already given up speaking to one another on aeroplanes. Rural pubs are some of the last venues in which you can make a remark to the fellow at your elbow without him necessarily shuffling away in horror of this weirdo. Sipping a congenial pint in a classic British pub reliably features on a foreign tourist’s to-do list.
Granted, younger Britons are drinking less (though, in terms of mental clarity, the substitution of weed may be worse). The smoking ban and drinking at home have likewise contributed to the pub’s decreased popularity. But business rates, which wildly escalated in 2017, when some taverns’ taxes increased by hundreds of percentage points, are accelerating the British gin mill’s cycle of doom. High taxes are passed on to the clientele, who beyond certain price levels simply can’t afford a night out.
Given Labour’s ‘banter ban’, pub patrons can’t even safely crack a joke. So here’s Rachel Reeves’s ideal saloon: rubbish architecture, view of a nail salon, no place to park, crisps at best and thin beer, because the brewer has watered the mix to dodge the ruinous alcohol-per-litre booze duty threshold. Maybe that spliff back home in front of the telly has something going for it after all.
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