Lib Link: Stephen Gilbert MP applauds Government for seeing sense on the “Pasty Tax”

A delighted St Austell and Newquay MP Stephen Gilbert writes for the Total Politics website about the repeal of the so called “pasty tax” which had attracted huge opposition in Cornwall.

But despite the inevitable inclination to baton-down the hatches the government did engage with the industry and understood the clear constituency interest of its own MPs. The alternative actually delivers the bulk of what the government intended without any of the negative impacts: all the upside with none of the economic downside.

There’s no doubt that caravans and pasties were unforced errors.  Hindsight is a great thing and nobody claims a monopoly of wisdom. Opposition can snipe, but here’s the thing, and whisper it quietly, the government listened to the people and Parliament – that’s surely a good thing?

You can read the article in full here. 

Just as an aside, A Lanson Boy is quick to correct the Telegraph for its statement that Conservative MP George Eustice was the leader of the campaign against the Pasty Tax.

George, like his fellow Cornish MPs, all backed the key amendment to the budget debate, but this was put forward by St Austell and Newquay MP Steve Gilbert, who also arranged the debate last week to keep the pressure up – a debate that Mr Eustice didn’t even attend.

As with any successful campaign, there was no one leader of this one. As mentioned in my last post, people like Kernow King, Steve, John Endacott, the Western Morning News (and the Sun), and I played a key role from start to finish but it was a wider campaign than any single one of us

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16 Comments

  • ………………………………Hindsight is a great thing and nobody claims a monopoly of wisdom. Opposition can snipe, but here’s the thing, and whisper it quietly, the government listened to the people and Parliament – that’s surely a good thing?………………
    A great pity then that, on ‘major’decisions (Disability, NHS, etc.,) they didn’t.

  • Richard Shaw 30th May '12 - 12:16pm

    I was and remain in favour of the so-called pasty tax on the grounds that if we must have VAT at all then it should at least be applied to all purveyors of unhealthy take-away foods rather than effectively giving a huge tax break to certain FTSE 250 companies while fish ‘n’ chip shops, etc. still have to cough up. If small firm jobs were at stake then perhaps they should have considered some form of threshold or exempting products with Protected Designation of Origin or some such.

  • Matthew Huntbach 30th May '12 - 12:57pm

    This was NOT a “pasty tax”. It was a correction of an anomaly on the taxation of food. Hot food taken away to be eaten while hot has VAT put on it. Cold food taken away, even if to be eaten right away rather than taken home, does not. My understanding is that there was a clause in the legislation intended to prevent this leading to bread freshly baked on the premises by small bakers being subject to VAT. This clause was exploited by big chains with the capacity and turnover to produce all sorts of food hot, and obviously intended to be taken away and eaten hot, in a way that they could pretend it was the equivalent of freshly baked bread. Quite clearly these chains were breaking the intention of the law, and quite clearly it made sense to tighten the wording to stop them – otherwise they had an unfair advantage over smaller businesses which could not manage that sort of trickery. Yes, I can quite see how food like a pasty could be kept in an oven on a lowish temperature and sol with the claim “Oh, it’s only just been cooked”, but in reality that it is sold hot is a big selling point.

    The emotive pull of dubbing it “pasty tax” worked, as those who invented it intended – it clouded common sense, it hid what this was really about. The reality is that pasties were just one of many sorts of food covered.

    I do not regard the backing down on this in the face of an emotive and misleading campaign whipped up by the main big company affected and by right-wing newspapers as “seeing sense”. Rather I see it as just another sign that the right-wing press are too dominant in this country and they are shameful in the way they twist things. How many people know that the “pasty tax” was not really just a special tax on pasties? Sadly, many who ought to know better joined in with this to ensure the trick worked.

    The subliminal message that the right-wing press was pushing here was the idea that all taxes are bad and all politicians are evil people who delight in imposing taxes to hurt people. This is part of their decades long campaign to make this country even more unequal and to block the sort of reform that is needed to stop the drift apart of rich and poor. It is pasties this time, but you can be quite sure any other tax reform to help end the growing wealth divide in this country will be met in the same way, by emotive and misleading campaigning from those who have a vested interest in protecting the wealthy and in turning this country into an oligarchy run by them.

  • “the government did engage with the industry and understood the clear constituency interest of its own MPs

    Blimey. There’s candour for you.

  • Tony Dawson 30th May '12 - 3:45pm

    The decision to put on the ‘Pasty Tax’ was possibly not the most brilliant one on the world, though Matthew Huntabach (above) explains the logic behind it well. Having taken it, the decision to remove it was really daft. How to make yourselves appear to be catspaws of the tabloid media.

    “How can we make ourselves appear to be even feebler than Ed Miliband?”

    “Hold on, I’ve got an idea……”

  • Totally agree with the sentiment in the post above – this was not something we should have U-turn on. It was a simplification of food VAT rating, and made things fairer. The fact that Greggs would get hit by it is not a reason to over turn it (even though I use Greggs a lot). Championing big business over small business like chip shops and takeaways is hardly a liberal cause.

  • Good., twas a silly tax .. Does Gregg’s or Mrs Muggins ye olde pastye shoppe really damage chippies or takeaways or for that matter Burger, King. KFC and McDonald’s. Note that defenders of the pasty tax never mention the big food chains or small pie shops.. It’s always Greggs v some mythical family business. And anyway removing takeaways from VAT would also rationalise the tax system.
    Personally, I think more things should be removed from VAT because I’ve yet to see a budget where a chancellor stands up and lowers the rates. Every year more and more is piled on., usually with much pious muttering about the need to protect the lower orders from themselves.

  • Matthew Huntbach 31st May '12 - 10:50am

    There should have been a contemptuous dismissal of the phrase “pasty tax” right at the start, just as there should have been a contemptuous dismissal of the phrase “granny tax”. How many people know that what the right-wing-press-Labour-Party-alliance referred to as “granny tax” was actually a shift of financial support for the elderly from support only to wealthy elderly people to support to all elderly people?

    Sometimes the best solution is the simplest. Explain it straight. Instead we seem obsessed with PR gimmickry, resulting in a patronising approach. Perhaps we know why politicians kow-tow to the press from recent events, but really, why couldn’t someone have stood up to this and said “Oh, don’t be so ridiculous – there is NO pasty tax, this is just nonsense whipped up to fool you by people with an ulterior motive”?

  • Obviously the pasty tax was just an extension of an existing Tax. But I think it became emblematic of deeper problems with the budget and with how we tax people. VAT has been extended to more and more items since it’s introduction in the 70s and has become a way of spreading the tax burden so that ordinary people pay multiple taxes on their day to day expenditures . There are even demands that all food stuff should be subject to VAT !.. Whether or not it theoretically isn’t inflationary, in practice it always is . Plus the less you earn the bigger chunk of your expenditure VAT takes. Why should customers and take away owners be taxed on their earnings, and then Taxed again on the food they eat.? It also plays into the hands of lobby groups as they demand that the public would benefit if the price of this or that were increased, which makes it look like chancellors are taking more money out of peoples pockets for some high moral purpose . And in some cases it damages revenue because it extends the Black Economy. Income tax and corporation tax are much clearer and fairer .

  • Matthew Huntbach 31st May '12 - 1:05pm

    Glenn

    VAT has been extended to more and more items since it’s introduction in the 70s and has become a way of spreading the tax burden so that ordinary people pay multiple taxes on their day to day expenditures .

    Yes, but at the same time income tax rates have gone down – in the 1970s the basic rate reached as high as 35%, now it’s 20%.

    Income tax and corporation tax are much clearer and fairer .

    And easier to avoid. Plus it ensures some of the money flowing from poor to rich through the “housing ladder” gets taxed, at least when that money gets spent.

    Why should customers and take away owners be taxed on their earnings, and then Taxed again on the food they eat.?

    To raise the money needed to pay for government services. Anyone who moans should say what they would tax instead of the tax they want to remove, or what government services they would cut. It should be done with at least some idea of a budget – not spending cuts in the order of millions to balance tax cuts in the order of millions, which is what you tend to get in most “bar room” discussion on such issues.

    Again, we need to stop being patronising and start talking to the public in a serious way about such things. Yet somehow politicians don’t seem to be able to escape from the PR marketing approach in which they put a one-sided salesmen’s pitch on anything they propose. So we get talk as if tax and spending were entirely separate things – as if tax were just taken to be nasty and spending could be whatever one wanted it to be.

  • Mathew, I believe in raising income tax, taxing financial transactions and treating tax avoidance as a crime. I also believe in creating a British equivalent of the IRS, with vigorous legal powers. I think VAT is a way glossing over the reality that lowering income Tax levels simply means that the revenue is taken by stealth disproportionately from the less well off.. I also suspect that removing VAT would be better for small businesses than tax breaks because it would increase sales, make them more able to compete with imports (which I would continue to Tax , but at a slightly higher rate, than they are currently ).

  • @Glenn
    “…and treating tax avoidance as a crime. ”
    Did you really mean to say avoidance? Avoidance is legal after all and there are lots of avoidance schemes actively promoted by HMG.

    “I also believe in creating a British equivalent of the IRS, with vigorous legal powers”
    HMRC have huge powers already though, what additional powers would you like them to have?

    Re VAT, don’t forget that there are limits on what you can do with VAT due to EU directives (e.g. no new VAT 0% ratings).

  • I did mean Tax avoidance. It’ always strikes me as ridiculous that you can have high tax brackets that can be legally avoided and that are certainly stretched in ways that look slippery. It’s similar situation to the expenses row a couple of years back. The point was really not just what was illegal or legal, but that to an outsider it all looked bad. Half of what was legal seemed little different to the stuff that wasn’t..
    The thing about the IRS is that they really go after people, they just seem more pro-active.

  • @Glenn
    Re Tax avoidance. Whilst it is a legitimate view and there are quite a few that agree with you (usually on the basis that you could lower income tax for everyone if no one had a get out clause), I think it would take a very brave group of politicians to tell the public that they are going to lose their tax exemptions on things like ISAs and pension contributions. It would also mean of course that charity giving couldn’t benefit directly from giving (as that is also a form of tax avoidance of course, it’s just that the money usually doesn’t go back into the individuals pocket).

    On the tax front, I think things may have started to change anyway, but it may be beneficial for the HMRC to actually blow it’s own trumpet a bit more to help with deterrence (see http://www.guardian.co.uk/business/2011/aug/27/crackdown-tax-evasion-criminal-convictions), I don’t think I can recall any TV adverts telling me that the tax man was after me, plenty about the TV man but not the tax man.

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