Most people think of #VAT as abstract, as a line on a receipt, a background hum. In reality, VAT shapes what we buy, where we go, and whether entire sectors survive or fail.

Here’s the uncomfortable truth:

The UK taxes hotels, cafés and restaurants harder than almost any comparable country in Europe and then acts surprised when prices rise, businesses struggle, and town centres hollow out.

In #hospitality, one fifth of every pound taken at the till goes straight to government. That’s before business rates, staffing costs, utilities, rent, food, maintenance, before the business itself glimpses a margin at all.

The logic. And the flaw

VAT makes sense in theory. A broad, catch-all tax on ‘non-essential’ consumption helps fund essential services. As consumers and business owners alike, we understand that logic.

But theory is nothing when it collides with real life and it’s messy mixture of needs and desires. We eat together, meet, travel, celebrate, rest. These aren’t luxuries in a life well lived; they’re how a healthy society functions. Yet we pay 20% extra, routinely, simply to participate in everyday life outside our own front door.

At some point, VAT stops being neutral and starts being punitive.

A lesson in temperature

If you buy a cold ready meal from a supermarket - a Charlie Bigham fish pie - you pay no VAT. You can take it home, heat and eat it.

If you buy the same food hot, you pay additional VAT at 20%.

This is why supermarkets obsess over temperature. It’s why rotisserie chickens have disappeared from UK shelves. Somewhere along the way, the law of thermodynamics became a proxy for “added value”.

But let’s agree - hospitality in all it’s glorious, generous, efficient and caring sense, “adds value”. That’s why you choose to eat out, rather than wash up at home. You want the buzz, the care, the new, the familiar and the ease of enjoyment without prep or clearing. Adding value is the very definition of what we do.

Government thinks that the value we add to your experience is 20%. We agree it’s valuable. We just think the people creating it should benefit from that added value: whether that’s to reinvest, to reward the providers, or to match prices more keenly to their real cost and delivery. 

Europe made an economic decision. The UK didn’t.

When you stay in a hotel, eat breakfast, or have dinner in a restaurant, the UK charges 20% VAT. 

In France, Spain, Italy - around 10% (averaged: these countries distinguish between food and accommodation but you get the point). In Germany - 7%. Portugal and Greece - 6-13% depending on category. It’s tempting to say that this is down to a cultural view of hospitality and long-standing traditions. But it’s not; these EU countries didn’t make a moral judgement about hotels. They made an economic one.

Those countries recognise that hospitality is price-sensitive, employment-heavy, and locally rooted. When you tax it less, demand rises. When demand rises, jobs, wages and tax receipts follow.

The UK currently takes a different path.

Hospitality isn’t a luxury niche. It’s one of the largest employers in the country, currently supporting around 7% of all jobs, and it’s deeply woven into everyday life.

It employs young people in their first job, parents working flexible hours, people in coastal towns, rural areas and regional cities, and whole supply chains, from farmers to tradespeople, grocers to creatives.

Unlike tech or finance, hospitality can’t move abroad. It can’t automate its way out of trouble or shift it’s fiscal home. When demand drops, the impact is immediate and very local.

Government says it wants stronger regional economies, thriving high streets, more domestic tourism, and better jobs outside London. Hospitality delivers all of those things, if our supply is allowed to breathe for long enough that demand can resurface.

Cutting VAT on hotels and restaurants would lower prices immediately, encourage people to travel and eat out more, support jobs and hours, and bring money back through income tax and National Insurance.

High VAT doesn’t mean people “just pay more”

When prices rise, people don’t protest. In the 21st century, they quietly opt out: one less meal out; a shorter stay; a postponed trip. 

In a perverse but understandable way, customers blame us for rising costs. (Gentle reader: consider that your gas and electricity suppliers pay only 5% VAT.)

Instead of asking whether hospitality VAT is already too high, the Treasury is now even flirting with additional local levies: tourist taxes, added on top of existing VAT.

This is not reform. It’s piling it on, and perverse.

During lockdown, reduced VAT wasn’t theoretical; it was make-or-break. With limited trading possible, pricing could stay keen, we could service demand and jobs were protected. 

Cutting VAT on hospitality would immediately lower prices, stimulate demand, support employment, and return revenue through income tax and National Insurance.

This isn’t theoretical. I’m making special pleading for hospitality - but in reality I want a tax system that reflects how the real economy works and cuts the fat off where there’s fat to be cut while supporting those sectors that are on their knees.

This is not special pleading. It’s how functioning economies behave.

If we’re serious about growth, jobs and vibrant town centres, the real question isn’t why hospitality wants lower VAT.

The real question is why the UK insists on taxing one of its most human, employment-rich industries harder than almost anywhere else – and then wonders why it’s struggling.