Cameron’s coalition government has announced plans to charge VAT on hot food, such as pasties, in order to make the VAT charges fairer across the market.
The plan has come as an attempt to even out VAT charges, with Cameron claiming it is unfair how other take-away options, including fish and chips, already have to pay this charge. However, VAT will only be applied to food that is “above ambient air temperature when provided to the customer.”
The Treasury’s definition of ‘hot’ food does leave confusion, with the financial website This is Money pointing out the problems with regards to British weather. For instance, a pasty would be considered warmer in the winter when the air temperature is cooler. Equally, the charge will inevitably give rise to disputes if a fresh batch of pasties is taxed whereas an older batch, which has been left to cool, will not be charged.
However, the controversial tax is just the beginning with regards to the ever increasing cost of living, which could be at the root of its backlash. It comes in the midst of a petrol crisis as the price of petrol hits 140 pence per litre for the first time. Labour leader Ed Miliband claimed this latest tax was the government “hitting people’s living standards in every way they can.”
The Prime Minister prompted criticism that he was out of touch with the public by claiming to have recently had a pasty from the West Cornwall Pasty Company in Leeds. Despite saying it was “very good”, it quickly emerged that this branch had closed in 2007.
Gavin Williams, of the West Cornwall Pasty Company, accused Cameron of not understanding the impact of the Budget on real lives. He went on to say: “What we really need from Mr Cameron right now is not advertising but clarity and leadership.
“We would have hoped that if he had been rubbing shoulders with our customers he’d better understand the impact that this move will have on them.”
The tax will be effective as of October 1st and is expected to raise £50million in the current financial year.