Fruit Tax Hike Tax Risk Shutdown Security Shutdown Shutdown Shutdown Shutdown Shutdown SUB AND 622M, Industry Warns
Pub operators and hospitality leaders have warned that chancellor Rachel Reeves’ expected tax attack on gaming machines could damage costs based on the fight against rising costs, lack of consumers and consumer confidence.
With predictions being made that the chancellor will significantly increase the work of the gaming machine (MGD) in the November 26 Budget, the trade bodies say the risk of pulling away from the final income of thousands of public pubs.
Fruit machines have been part of British pub culture for over 50 years, and although their numbers have declined since the heyday, they remain an important income. According to the wind, about 36,700 fruit and slot machines operate in almost half of pubs in the UK, generating £622 million a year. Once taxes, supplier hire and other charges are deducted, suppliers are left with a net profit of around $385 million – or around £8,500 per pub – at a time when margins are already “shrinking”.
The fear has fueled subsequent reports prompting Reves to prepare for a major increase in gambling sites to help plug the £30 hole in funds. The proposals being discussed include sports betting operations from 15% to 30% and raising machine and online slots operations from 50% to 50%. For pubs, whose gaming machines have low numbers and are consistent with their core business, industry leaders say such a jump would be difficult.
Lawson MountSTESTVENS, Managing Director of Heineken-owned Star, said that pubs are already under “Tubs Tream” following last year’s increase in national insurance and national income. “Our ground floor equipment is an important income stream. Any move to take away their value places a strain on our ability to serve communities in the UK.”
That view is shared across the industry. James Baer, the chairman who manages Amber Taverns, said that the increase of MGD with machines “illegal” in Pubs’ Peatback “after they were described in hospitality last year.
Greene King Chieve Executive Nick MackonZie warned that the measure could “become a tipping point” for pubs already facing an “Avalanche of costs”. The British Beer & Pub Association (BBPA) estimates an increase in MGD to 50% would cost pubs £187 million a year, the equivalent of 16,300 jobs.
Emma McClarkin, Chief Executive of the BBPA, said the impact would be catastrophic. “These are low margin businesses that create a large number of jobs for young people. Any increase in the cost of doing business brings them closer to closing their doors.”
Analysts believe that listed pub companies could face significant hits. EJD OF TEMPERSPOON – You have already taken £60 million in additional annual costs due to staff changes – Peel HuntStates hunting analyst Couglas Jack moving 50% MGD will cost 50% MGD. Founder Sim Tim Martin said gaming machines may represent a small part of Wetherspoon’s sales, but they remain “an important part of the pub’s economy” and are “just a tax”. Further expansion would be “another straw on the camel’s back”.
The sector fears the government’s calculations are flawed. Instead of bringing in more revenue, higher taxes would render many machines useless, encourage their removal and actually reduce the total tax rate. Chris Jowsey, Chief Executive of Admiral Taverns, warned that the move could have a “devastating effect”, cutting revenue from venues in areas where income streams are being disrupted. Of the Admiral Tavern’ 1,300 documents, the machines are currently generating an income of around $6,000 Net income per year; Under the proposed tax rate, this will fall to £2,625.
Along with financial pressures, industry leaders say the timing could not be worse. New estimates from the BBPA suggest that 332 pubs will close by the time the Chancellor delivers his budget. The worry is that MGD’s rise will hasten the decline of one of Britain’s best-loved public institutions.
Trade bodies including the BBPA and the regulator are now urging the Government to crack down on exemptions for class C slot machines and class D arcade-streen penny machines – both used in recreational facilities.
Kate Nicholls, chairman of Kokoko, said that for many pubs, machine income has become “very important” as they face effective operating costs. Increasing MGD on these machines, he said, would be dangerous “in the long term in the long-term sector.
A spokesperson for the Treasury, said the tax decisions will be announced in the budget, adding that its tax gambling consultation is focused on remote betting websites, which use lower costs, and bring higher profits than traditional sites.
The leaders of the industry are always banned. Jowsey said: “This would not relieve the target. “It will accelerate the closure of the PUB, reduce jobs, potentially reduce high streets and potentially reduce overall taxation.”
