A series of tax increases is making the hospitality industry unaffordable

KHN sees the government taking action on employers’ costs; it is now crucial to press ahead

KHN is deeply concerned about the repeated increases in costs. Under the current tax plans, the hospitality sector will become unaffordable for both guests and business owners. Business owners can no longer pass on rising costs and are therefore absorbing them themselves, at the expense of profit margins and investment capacity. KHN does recognise that the government is taking initial steps to address the enormous employer costs. Scenarios have been presented for a different structure for continued pay in the event of sickness. Postponing the abolition of compensation for the transition payment is also desperately needed, although it would be better if it were scrapped altogether.

KHN is therefore calling on the Government to press ahead with reducing employers’ costs. It is positive that scenarios are on the table for alternative forms of continued pay in the event of sickness, but the regulations surrounding return-to-work support can and must also be made simpler and less costly. The level of unemployment benefit (WW) and work and income support (WIA) contributions must also be discussed. These are issues that belong in a new, comprehensive social agreement, and KHN would be keen to contribute to the discussions.

Stop constantly increasing the tax burden

The hospitality sector plays an important social and economic role: it brings people together and provides employment. However, the future of hospitality businesses is under severe pressure. In recent years, hospitality entrepreneurs have already been faced with a combination of rising costs and increased administrative burdens due to regulatory pressure: rising staff and energy costs, higher local charges (such as a sharp rise in tourist tax) and the VAT increase on accommodation from 9% to 21%.

Meanwhile, there are already threats of new measures, such as an increase in alcohol duty, the introduction of a sugar tax and higher tax on tap water. Ralf Benda, chairman of KHN, emphasises: “Business owners have largely absorbed these costs themselves, but their reserves have been depleted and the ongoing rise in costs is putting further pressure on margins. Taken individually, these increases appear to have a limited impact, but the combined effect is putting the sector under even greater strain, as business owners can no longer pass on the costs to their guests.”

What KHN is specifically asking for

To prevent businesses from going under and to create scope for the future, the KHN is calling on the Government not to hesitate and to take immediate action. The KHN is calling for concrete measures:

• A more decisive approach to employers’ social security contributions by reducing the period of continued pay in the event of sickness, relaxing the rules on dismissal, lowering the WIA and WW contribution rates, and maintaining the compensation for the transition payment.
• Reconsideration of announced additional levies such as a sugar tax, an increase in alcohol duty and a tax on tap water.