'People power' victorious on Pasty Tax and Caravan Tax?
So. Pasty Tax has been burned. It’s crumbled, taken the biscuit and any other tenuous food-related pun you can think of. Or has it? Although the papers are full of the news that the unpopular sausage-roll-and-other-baked-goods tax has been scrapped, this is not strictly true. In fact the Government have written to the House of Commons Treasury Select Committee to outline the intention to amend the legislation as it relates to the VAT on hot food provisions and static caravans.
The main problem with the pasty legislation was that it referred to food served above the “ambient temperature”, and for bakers and pasty makers, this meant that customers arriving just after baked goods have left the oven could be charged 20% more for their food than the guy at the end of the queue, by which time the food has cooled. Similarly, what is ambient temperature? Does it really make sense to charge more for Steak Bakes in this week of hot weather than in last week’s rain?
So, the Government have now decided that VAT will only be applicable to food served from a hot counter, doing away with all that silly ambient temperature nonsense. At the same time they have decided to delay the VAT charge on static caravans until next April, when it is likely the reduced rate of VAT (5%) will be charged instead of the full 20%.
This is clearly good news for pasty munchers, everyone in Devon and Cornwall, and, especially, Greggs the bakers. Less than a fortnight ago, the firm reported a profit warning, attributable to the pasty tax, but since news of the changes have emerged, shares in the firm have risen by 6-8%.
And everyone is claiming the credit for this turnaround. Sheryll Murray, Conservative MP for South East Cornwall, said to the BBC "I told the government that I didn't want to see an army of thermometer-wielding tax inspectors poking our pasties and that I was really concerned about the vagaries of ambient temperature. They listened."
Liberal Democrat MP for Newquay (also in Cornwall) Stephen Gilbert added: "The Cornish people have won and there will be dancing in streets from Land's End to the Tamar as people hear that the government has dropped its plans to clobber local people and local businesses with this tax."
Labour are predictably sniffy about the whole affair. Shadow chief secretary to the Treasury, Rachel Reeves, described the policy reversal as "a total and utter shambles".
"These partial U-turns, just a few weeks after ministers were defending the pasty tax and caravan tax, show just how ill-thought through the Budget was and how out of touch David Cameron and George Osborne are," she grumbled.
However, call me an old cynic, but Alastair Campbell or no, this smells less like the aroma of freshly baked goods and more like some good old spin. While everyone has been getting their knickers in a twist followed by jubiliant “dancing in the streets” now the eventual ‘victory’ has been claimed, perhaps the Government are quietly chuckling into their sleeve. After all, today, people are positively welcoming a VAT charge on hot counter food and a 5% charge on static caravans. Sounds like a much better plan than just announcing those changes to me…