Will the U-turn on the “Pasty Tax” lead to a tax on all food?
Posted May 29 2012 6:31am
And no, constant reader, that’s not as absurd an idea as you might think – read on.
There is a degree of anger on Twitter that people are perceived to be obsessing about the “pasty tax” when there are more important issues at stake and – to a degree, at least – they do have a valid point.
However, to view this as such a one-dimensional issue is probably a mistake.
For a start, forget the bloody pasties! This was a tax on all hot, in the main hand-held, food, embracing a very wide range of products. The actual Cornishpasty, nationally, represented a relatively small part of that market when you consider how many varieties of pasties and “slices” which probably outnumber pasties, as they lend themselves to mechanised production, are available that are not remotely Cornish, not to mention pies, sausage rolls, etc.
Personally, I always saw this tax as less a tax on convenience food, and more a testing of the water before taxing all food – the revenue from which would be vast. I still don’t think I was wrong in that assessment, nor do I think the risk of a general tax on food, from this government, has now gone away, because the much-vaunted U-turn is nothing of the sort.
True, Osborne/Cameron have caved in to the major players, like Greggs nationally, or Sayers here in the Northwest (owned by Warburtons), but the tax burden still falls on the small outlets, the very many butchers, not to mention small bakers, who bake on the premises and display a proportion of their output in heated cabinets – they get hit with the 20% tax. And while I have no numbers, I strongly suspect that these outlets, nationally, considerably outnumber Greggs, but being mostly owner-run, have no political muscle.
And let’s not forget that food from takeaways has been taxed for many years, so why was it perceived to be so unfair to tax other hot food? Why should the likes of Greggs be excluded just because they can scream louder than anyone else, while independent butchers are not?
The idea that food baked and left on display to slowly cool is somehow different to food baked and kept at temperature in a hot cabinet is facile at best.
But here’s a thing. My local butcher, to use what I know as an example, has maybe 20-30 pies, sausage rolls and pasties in a hot cabinet, the rest are sold cold or cooling, so he, and everyone else in the same position, has to remember to apply VAT to the relatively few hot items, while not applying it to the hot but cooling, or cold, items. It’s insane, and wildly open to abuse. I think it’s going to be remarkable how few hot items are recorded and taxed as sold from a hot cabinet in the future – after all, there’s no way to monitor this without recruiting an army of prodnoses to lurk outside shops and scribble furtive notes.
And a law that cannot be enforced is utterly pointless.
So, then, what’s the best, most economical way of ensuring compliance – and one which will not only work but will actually return a substantial profit?
Yep, that’s right – a tax on all food. Possibly not the full 20% – that would be political suicide and even Osborne isn’t that stupid (maybe!), but 5%, that’s probably viable, especially if they initially go with 20%, to allow them wiggle-room for a perceived u-turn to the 5% they always intended, which the great, and arguably dumb, British public will see as a win.