XXI Century's Unprecedented Tax Burden': McMullen's Pub Chain Slams Skyrocketing Government Tax Increases
Pub chain McMullen's takes aim at the government's hefty tax hikes, highlighting the detrimental impact they'll have on the hospitality industry. These damaging tax increases are poised to lead to reduced demand and investments, forcing the industry to shoulder the burden of increased government spending.
Hailing from Hertford, McMullen's, which operates around 120 pubs in London and the home counties, have expressed concerns owing to a fundamental tension between escalating business expenses and the government's expectations of economic expansion[1]. Outgoing chairman, Charles Brims, has declared the Autumn budget as bringing an "unprecedented tax and cost burden in the 21st Century," with larger employers taking a significant hit.
"While the government aims to 'kickstart economic growth,' it remains unclear how this is to be achieved, particularly within our sector," Brims stated[1]. The government's focus on growth clashes with adding costs to businesses, especially regarding taxes and labor, which can diminish the cash available for investment in growth, consequently stifling long-term expansion.
If businesses absorb the costs, cash for investment in growth will deplete. On the flip side, if businesses pass on the cost to consumers, real disposable incomes will plummet, curbing consumer demand and growth prospects. The firm asserts that the Autumn Budget tax rises "will create additional challenges at several levels for our business"[1][3].
Apart from these financial struggles, the firm has expressed concern over the government's plan to partially remove business property relief against inheritance tax, which could potentially be self-defeating for the treasury and damaging to the company[2]. The hospitality sector, which bore the brunt of the pandemic's public health demands, is now bearing the brunt of the government's financial demands.
Despite these challenges, McMullen's has shown resilience, posting an increase in profits for 2024, returns that match pre-pandemic levels for the first time. However, underlying demand challenges have been partially shaded by rises in food and drink prices, with customer disposable income remaining vulnerable[2]. The company's brewing division has also faced a 5% reduction in own-brew dispatched volumes over the period.
[1] - The increase in employer National Insurance contributions, reductions in business rates relief, and the proposed new recycling levy have directly hiked costs for businesses, necessitating either absorption or passing on to consumers.[2] - Higher taxes and costs mean less available cash for businesses to invest in growth, expansion, and improvements, which stifle long-term competitiveness.[3] - If businesses pass on increased costs to customers through higher prices, real disposable incomes decline, resulting in lower demand, which can hurt the sector’s revenue and growth prospects.[4] - Profit margins in the sector are now extremely tight, and further tax increases risk pushing many businesses "over the brink."
- The increasing costs of taxes, employer National Insurance contributions, and new recycling levies, as stated in the Autumn budget, pose challenges for businesses like McMullen's, potentially forcing them to either absorb the costs or pass them on to consumers.
- The hospitality sector, including McMullen's, is concerned about the government's plan to partially remove business property relief against inheritance tax, arguing that it could be self-defeating for the treasury and detrimental to the business.
- The finance minister's focus on growth through tax increases and added costs to businesses, such as higher taxes and labor costs, is creating a tension with the availability of cash for investment in growth, expansion, and improvements, which can hinder long-term competitiveness in the business sector.
- The government's financial demands, combined with the fallout from the pandemic and increased costs, are putting pressure on the hospitality industry, potentially pushing businesses to the brink and impacting the overall economic growth and stability, as indicated in the general news.
