Gale`s View – 3rd April 2012

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April 3rd 2012

The proprietors of fish-and-chip shops on the seafronts of Thanet and Herne Bay have long wondered why it is that they have to charge their customers VAT on the food that they sell while those long-suffering commuters who patronise the chi-chi little “Original Cornish Pasty” boutique at Victoria Station are able to buy their snacks VAT free.
 
The answer presumably, is that the wily Chancellor that slammed VAT on fish-and-chips realised that while no sane person would want to eat that meal lukewarm or cold it was harder, if not impossible, to define “hot food” in general.
 
When George Osborne decided to put VAT on hot take-away meals such as pasties we all knew what he meant.  Then the press got to work on definitions of “hot”, “warm”, “lukewarm” and so on and the Opposition seized on this “attack on the working class”.
 
Setting aside all considerations of diet and obesity it is reasonable, I think, to suggest that while the Cornish Pasty (with crimped edges - European definition approved) was designed as a tin-miners sandwich and frequently eaten cold it has not, for about a hundred years, been regarded as a staple food for honest sons of toil and soil!
 
There is, though, an anomaly in the law.  Impose VAT on all takeaway food, hot or cold?  That would level the playing field and be fair to fish-and-chip shops and it would bring in some extra boodle for The Treasury but where do you draw the line?  Is a pork pie or a sausage roll bought in a supermarket “take-away food”?  Of course it is. Move down that route and pretty soon we would find ourselves paying VAT on all food, which might be an option but would not be popular.  Another option would be to remove VAT on fish-and-chips but in the present economic climate that, while popular, would mean the imposition of another tax on another product to make up for lost revenue and that would upset another group of people.
 
Presentation is, these days, all.   When Francis Maude suggested that we might prudently store a “jerry can of petrol” in the garage he was not referring to the sizeable wartime container used to carry fuel and water for armoured vehicles. He meant, quite reasonably, the standard purpose-designed petrol can of the size and kind sold by Halfords and all good motoring supply stores.  But that is not how it came across!
 
I stand to be proved wrong but I believe that once the dust has settled budget it will be seen to have been both in the national long-term economic interest and, as important, fair.  The “rich” will be paying a lot more tax as loopholes are closed, the very modest reduction in higher rate tax the  will, when it is eventually introduced, certainly not generate less tax revenue, may well generate more and will stimulate growth as will the reduction in corporation tax.  The rise in the tax threshold will benefit a very significant number of those on lower incomes and the alterations to Child Tax Credits will assist those who felt, rightly, that the original “cliff edge” proposal was unjust.  The so-called “Granny Tax” (which is , in fact, a change in tax relief) does not mean that, as a result of the largest increase in State Pension ever, pensioners will be worse off in a couple of years time.  Failure to have introduced this package, though, would have anchored the economy where the party currently led by Mr. Miliband left it – in ruins and with a burden of debt and the costs of an ageing population that our children and our grandchildren would have to meet.  Is that really what we wanted from George Osborne?
 

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