/ Food & Drink, Money

Is the ‘pasty tax’ taking the heat off meatier issues?

Pasty-gate – it’s a phrase that’s been in the mouths of the media ever since last week’s Budget 2012. So, as I ate my lunch yesterday (homemade sandwiches) I decided to find out what all the fuss was about.

As part of the Budget last week, George Osborne said:

‘Hot takeaway food on high streets has been charged VAT for more than twenty years; but some new hot takeaway products in supermarkets are not. We’re publishing our plans today to remove loopholes and anomalies.’

A half-baked tax?

A VAT on hot food was put in place in the 1980s, but freshly baked goods, like pasties and pies, were exempt. This is the ‘loophole’ that George Osborne has now closed.

To put it more simply, all food sold ‘above ambient temperature’ will be charged 20% VAT. This could add 50p to the cost of a pasty – a decision that has eaten into high-street baker Greggs’ share price, for example.

However, politicians and the media have been picking holes in the proposal, one of which is the British weather. In the summer a lukewarm pasty would be below ambient temperature, but in winter this same pasty would be above ambient temperature – in one case it would presumably be taxed, in the other it would not.

The proposal could lead to bakeries selling cold pasties for you to heat up yourself. It could even hypothetically lead to two queues, separated by those willing to pay extra for their lunch to be hot, and those who aren’t.

Don’t make a meal of VAT

Looking at the Revenue and Customs website, the plot thickens. Cakes and biscuits are in the main exempt from VAT as they are deemed apparently a ‘necessity’, but as ever there are exceptions to the rule.

Millionaire’s shortbread is zero-rated for VAT, but if you took out the caramel and just had chocolate-covered shortbread, it would be standard-rated for VAT.

With many families finding their purse strings ever tightening and VAT now at 20%, there’s no doubt that VAT-able goods will impact our purchasing decisions.

But as much as I could argue about the rights or wrongs of taxing hot food, perhaps it’s worth thinking about the bigger picture. Either all VAT anomalies need to be ironed out, or we need to talk about bigger issues.

Let’s get hot on the Budget

The government’s decision to close this loophole could either be seen as a well-intentioned effort to put all hot food sellers on the same footing, or it could be seen as a ‘stealth tax’ on the poor. However, last weeks’ Budget introduced a number of major changes to tax bands, stamp duty, and child benefits, with most people being affected, whatever their income.

With this in mind, I find it hard to understand why there’s been such a focus on ‘pasty-gate’.

So, does ‘pasty-gate’ show that the government is out of touch with real people, or that people (and the media that feeds them) are out of touch with the real hot potatoes of the Budget?

Comments
Member

As always, the Conservatives are doing everything to punish the poorest in society for the benefit of the rich!

Member

This reminds me of the time when gramophone records were subject to 8% VAT and record players were subject to a higher tax (25%?). A bit daft.

If I buy a pasty in Greggs, can I get a discount if it is cold? 🙂

Member

That seems to be what has been suggested, as said at the end of this video.

Member

It’s good to see that the government gets involved with down-to-earth, practical issues. 🙂

Member

I cannot believe that they are calling this a loophole, considering the massive real tax loopholes that exist for those with enough funds to hire accountants to exploit them. What are they doing about these?

But you are absolutely right about this masking other much more serious issues.

Just 1 instance of massive demographic changes seemingly aimed at the re-Victorianisation of Britain.

The changes to housing benefit, meaning that the Govt’ from Jan 2012 has reclassified all single people in this country under 35 with no children as young adults, drastically cutting their benefit entitlement. We now have a flood of people between 25 & 35 being made homeless, with absolutely no chance of finding accommodation. This legislation is in direct contravention of EEC age discrimination legislation.

Imagine a 30 yr old squaddie, back from Afghanistan, now sacked by Cameron, seeking aid to find somewhere to live, being told ‘sorry, you are not a man you are a young adult and only entitled to enough benefit to enable you to rent a room in a house share with other youngsters.

What else should we be discussing but are not due to this smokescreen?

Member
Jimboc says:
30 March 2012

Biscuits are non-vat if they contain chocolate like cookies but put chocolate on top and vat is due, your comment is misleading

Member

Hi Jimboc, you’re right, biscuits covered in chocolate are VAT-able. But Erica’s right also with millionaire’s shortbread – this isn’t VAT-able, but shortbread covered in chocolate is (the only difference is one has caramel and the other does not). Just shows how mixed up the current system is. Thanks.

Member

There is a simple way out for shops – only sell cold pasties but have a microwave available for the public to use for free.

Member

I think it’s all about the temperature it is when you leave the shop…