Heated Debate over Hot Food VAT Continues

During the Budget 2012 announcement, George Osborne explained that the introduction of 20% VAT on pasties, rotisserie chickens and other hot foods was done to “clarify the definition of ‘hot takeaway food’, as he felt many loopholes needed to be overcome.

Many members of the public are outraged at this price increase, including companies like Greggs and the West Cornwall Pasty Company whose main revenue comes from the sale of pasties. With such a large national outcry many politicians, including Prime Minister David Cameron, have spoken up on the matter consequently providing Greggs with increased publicity. Mr Cameron explained he “loves a hot pasty” but the VAT rules need to be “fairly applied”. He continued by explaining the unfairness of small businesses paying tax while large supermarkets sold VAT free cooked chickens.

For the past few days the nation has been obsessed with pasty news, with phrases like ‘pasty gate’ trending on twitter and the publishing of numerous photographs of MPs, with a tooth-aching smile, buying pasties from Greggs. Leader of the Labour party Ed Miliband voiced his opinions on the matter after leaving Greggs, criticising the Conservative government’s decisions over the past few days. “There is a serious point here which is that the Government is hitting people’s living standards in every way they can. Not just fuel duty going up, child benefit taken away, tax credits being cut, now even putting 20 per cent on the cost of pasties, sausage rolls, and the Chancellor’s excuse? Well, he says you can buy them cold and you can avoid the tax.”

“It just shows how out of touch this Government is and it shows that we’ve got a Budget that is hitting millions of people while cutting taxes for millionaires. It’s not fair and it’s out of touch with the vast majority of people in this country”.

Since the budget announcement, Greggs shares fell by around £30million. With this lack of confidence in the hot foods sector, smaller businesses and restaurants that provide fresh hot snacks will need to work hard to offset the negative impact this VAT will have on their sales. This will include sourcing cheaper items like furnishings, ingredients and commercial restaurant insurance.

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