Pasty tax

Hmm, so, they retreat.

The government\’s reputation has suffered a series of fresh blows as the chancellor, George Osborne, was forced to make two climbdowns over his budget, including scrapping the \”pasty tax\”, and ministers prepared to make a series of new concessions over secrecy.

Osborne is to reverse plans to charge VAT on food that is designed to cool down, such as sausage rolls and pasties,

That was never actually the point though. As EU Referendum has told us innumerable times, the point was to stop the chippies being able to claim back the last decade\’s more or so of VAT that they have been paying.

Under the changes, the government will charge VAT on food designed to be eaten warm, for example on rotisserie chickens sold hot by supermarkets.

Ah, that\’s how to do it.

But now the existential question: is a pasty designed to be eaten hot or cold? A beef and onion pie? A cheese and onion slice? A pizza? Does it differe based upon the intentions? Would a programmer who has pizza for breakfast be able to claim that said pizza was purchased with hte intention of eating it cold?

Only the EU Court can tell us…..as they had to with Jaffa Cakes.

23 thoughts on “Pasty tax”

  1. How about charging a single uniform VAT on everything?

    No, can’t do that, that wouldn’t give the politicans enough opportunity for vote-mongering, constituency-pandering and euro-bashing.

  2. And it would leave lots of tax lawyers out of work, and hence angling for a seat in the commons. Maybe we are better off with the status quo…

  3. A pasty is clearly designed to be eaten cold.

    The pasty case is a protective covering for the working man to be able to carry his lunch out into the middle of a field or down a mine.

  4. Future historians will wonder at a society that could develop such a bizarre and byzantine system of taxation. Is there a special category for tepid foods?

  5. I like pasties hot. Once cold the filling congeals. Apparently I have to be taxed on my preference for hot pasties. Unless I buy them cold and heat them up myself, of course.

    James V

    That was exactly what the Mirrlees Review suggested.

  6. “the government will charge VAT on food designed to be eaten warm”

    But isn’t that exactly what they do now? The test being whether it is sold “specifically for consumption whilst still hot” (VAT Notice 709/1).

    They might be tweaking the definition, but it looks like a complete climb-down to me. Bloody silly, to drop it after going through all the media storm.

    And yes, it is about the customer’s intention, but it’s a sort of standard customer’s intention as evidenced by the way it’s sold (including things like whether you give out paper napkins).

  7. I used to make pasties in a bakery when I were a lad in t’West Country like, sniff (the sniff is a Bristolian thing at the end of a sentence, just joking, honest)

    Fortunately the ‘meat and veg’ mix was reconstituted and I never saw it raw.

    Not stopped me eating them although a stupid tax might

  8. Future historians will wonder at a society that could develop such a bizarre and byzantine system of taxation. Is there a special category for tepid foods?

    Surely we ought to have a system where VAT is proportionate to temperature, say*.

    Then we can have lots of arguments about where in the food the temperature was taken, and with what measuring device, and whether said measuring device meets EU standards, etc…

    * Although that might be too simple.

  9. Of course VAT should be a flat rate charged on everything. Simplification and ease of use all round.

    However a year later someone will pipe up. Don’t you think it might be a good idea to help people with heating by lowering VAT on fuel, and isn’t VAT on books really a “tax on knowledge” ?

    And we’ll be back to where we are now.

  10. Flat VAT on all goods, quite right. And spend the extra income on increasing state pensions, benefits, and the Income Tax Personal Allowance, so that poor people can still afford to eat and keep warm.

    I carefully wrote “all goods” because the list of VAT exemptions and reduced or zero rates is a long one, and you’d want to be careful about how you applied VAT to some services. The Mirrlees report is a good starting point.

  11. Having just thought about it a bit longer it is clear that pasties are intended to be served at body temperature.

    They are specifically designed to fit into a working man’s pocket. And were thus traditionally served and eaten at body temperature.

    Exactly the same as sushi (well, the rice part, not the fish).

  12. PaulB,

    Flat VAT on all goods, quite right. And spend the extra income on increasing state pensions, benefits, and the Income Tax Personal Allowance, so that poor people can still afford to eat and keep warm.

    Far better to eradicate VAT completely as it is a tax on specialisation, and therefore makes us poorer. Put tax on land value, which is far more efficient.

  13. Tim Almond,

    How exactly is a flat rate of VAT across all goods and services a “tax on specialisation”?

    And how would you deal with the main problems with land value taxation, namely liquidity (tax has to be paid from income even if it is a tax on assets) and high housing density?

  14. Indeed, Frances. The whole problem with the LVT is it taxes something virtual (“valuation”) but demands payment in real money. Even tyrants of old didn’t tax you on corn you would have grown if you grew corn even though you don’t grow any corn. The LVTers can never grasp the difference between a valuation- the estimated value of something if you sold it under present market conditions- and a value- the actual value the market accords it at the instant of sale.

    To be fair to Henry George and his original followers, they did recognise this. The whole idea was to force landowners to sell, by hitting them with an enormous tax bill. The idea was that anyone not using their land to produce income couldn’t afford the tax, while rentiers would lose all their profits. It was thus quite popular among late nineteenth century “New Liberals”.

    Modern Georgists tend to be a little less honest about this, since it isn’t very nice to throw people out of their houses for unpayable tax bills. But it’s inevitable if you tax assets rather than income.

  15. Ian B trots out his tired old KLN:

    “The LVTers can never grasp the difference between a valuation- the estimated value of something if you sold it under present market conditions- and a value- the actual value the market accords it at the instant of sale.”

    To which I respond, markets don’t care about values or valuations, they care about prices, actual amounts which people are willing to pay in cash.

    The LVT is merely the price charged for a particular service, the free markets will adjust selling prices (or even rents) up or down accordingly, and this in turn impacts on the LVT rate (because it can never be 100% right everywhere all of the time).

    As to “throwing people out of their houses” this has been the Weapon Of Choice of the landed classes, Home-Owner-Ists and bankers down the ages, what’s so terrible if it’s used as a weapon against them?

  16. Frances Coppola,

    How exactly is a flat rate of VAT across all goods and services a “tax on specialisation”?

    Because the government levies a 20% tax on hiring a specialist to do a job, rather than doing the job myself.

    If I work out the value of spending my time decorating my kitchen, including loss of software development income, quality of my decorating and compare that with the cost of hiring a specialist and the quality of his decorating, if it resulted in hiring the decorator as being 10% better then obviously I would hire him.

    If you add 20% VAT into the equation, the balance is now tipped in favour of me doing the job myself. The government has, in effect, skewed decision making in favour of generalisation.

    (unfortunately in the UK, there is a general belief that generalisation is a good thing).

  17. That’s a novel argument I haven’t seen before. It does however raise a counter-argument that if you can do it yourself, you’re reducing economic efficiency as a whole by employing somebody else to do your kitchen while you sit on your bum doing nothing. That’s a producer who could be doing somebody’s kitchen who can’t do it themself.

  18. Ian B,

    That’s a novel argument I haven’t seen before. It does however raise a counter-argument that if you can do it yourself, you’re reducing economic efficiency as a whole by employing somebody else to do your kitchen while you sit on your bum doing nothing. That’s a producer who could be doing somebody’s kitchen who can’t do it themself.

    No, you’re not. Doing nothing is as much part of “economic efficiency” as going to work. We value leisure time. That’s why a lot of people stay on benefits rather than taking min wage jobs – the net amount that their time is valued at is less than what they value playing Xbox and shagging.

  19. So this u-turn has nowt to do with a £100k donation to the Tory Party coffers from Ginsters then?

  20. No, cos Ginsters make pasties that are sold cold (yes, I know about their hot pasty trial, but it makes up a miniscule proportion of revenues).

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