By a Newsnet reporter
SNP Westminster Business spokesperson Mike Weir MP has called for the Treasury to reverse plans to impose VAT on certain hot foods – warning the so-called pasty tax, which has been condemned by bakery chain Greggs, would also hit independent bakers selling hot snacks, including the famous Forfar bridie.
Without any consultation with the sector, the Chancellor announced in his Budget that, from 1 October, any pasty that has not cooled beneath “ambient temperature” must be sold at a price that includes 20% VAT.
The VAT hike will cause a large rise in price for hot foods often consumed by workers on lunch breaks. The Budget measure means that a bridie, pie or sausage roll fresh from the oven will be subject to VAT, but if it is left to cool before sale then it will be zero-rated for the tax.
The imposition of the tax on bridies, pies, sausage rolls and pasties has left Chancellor George Osborne open to the accusation that the top ranks of the Conservative party are insensitive to working class life. At a meeting of the Treasury Select Committee on Tuesday, Labour MP John Mann asked the millionaire Chancellor when was the last time he bought a pasty in Greggs.
A clearly exasperated Mr Osborne replied that he couldn’t remember.
“That kind of sums it up,” retorted Mr Mann.
On Tuesday, Greggs chief executive Ken McMeikan said ministers had “lost touch” with ordinary people and did not appreciate what impact the changes to VAT rules on the lunch time staple would have.
Prime Minister David Cameron attempted to rescue the Chancellor by announcing that he “loves pasties” and claiming that the measure would defend takeaway outlets against competition from major chains.
Mr Weir said:
“The Treasury must reverse its half-baked pasty tax which will hit independent bakers selling snacks including the famous Forfar bridie.
“Until now VAT was chargeable on pasties that were heated for consumption, but the new rule means pasties that have not yet cooled from the oven will also be subject to full rate VAT.
“This tax has been sprung on the industry without any consultation, and without any thought about how it will impact on businesses. Nation-wide chain Greggs had £30million wiped off its market capitalisation last week following the announcement – and the decision will impact on small businesses and high-streets up and down the country.
“While the LibDems and Tories in the Treasury have prioritised a tax cut for millionaires, this raid on hot foods will hit hard-working households and small businesses.
“Many such businesses are already having a tough time and this is yet another whammy from an out of touch UK Chancellor. The Treasury must drop this daft policy like a hot cake.”