Pasty tax

Pasty Tax

A traditional Cornish pasty, cut open to reveal its filling

The term "Pasty Tax" refers to a controversial tax policy in the United Kingdom that was introduced as part of the 2012 Budget by the Chancellor of the Exchequer, George Osborne. This policy aimed to standardize the application of Value Added Tax (VAT) on hot food items, including the popular Cornish pasty.

Background

The Value Added Tax system in the UK has long been a complex area, particularly concerning food items. Generally, most food products are zero-rated for VAT purposes, meaning they are not subject to the tax. However, hot food items sold for consumption while still warm have traditionally been subject to VAT.

Introduction of the Pasty Tax

George Osborne, the Chancellor who introduced the Pasty Tax

In the 2012 Budget, George Osborne announced changes to the VAT rules, which included the "Pasty Tax." The proposal was to apply VAT to all hot takeaway food, including items that were kept warm or reheated for sale. This change was intended to close a loophole where some hot foods, like pasties, were sold without VAT if they were not kept warm intentionally.

Public Reaction

The announcement of the Pasty Tax led to significant public outcry and media attention. Many saw it as a tax on a traditional and affordable food item, particularly affecting regions like Cornwall, where the Cornish pasty is a cultural staple. The policy was criticized for its potential impact on small businesses and consumers.

Government Response

In response to the backlash, the government made amendments to the policy. The revised rules stated that VAT would only apply to hot food that was kept warm for the purpose of being sold as hot. This meant that if a pasty was baked and left to cool naturally, it would not be subject to VAT, even if it was still warm when sold.

Impact

The Pasty Tax highlighted the complexities of the VAT system and the challenges of implementing tax policies that affect everyday consumer goods. It also underscored the cultural significance of certain foods and the sensitivity of tax changes that impact traditional practices.

Related Pages

• Cornish pasty
• Value Added Tax
• George Osborne
• 2012 United Kingdom budget