Monday, 28 May 2012

Osborne confirms pasty tax will go ahead

George Osborne has apparently "backed down" on the pasty and caravan taxes.

The Chancellor announced the pasty tax and caravan tax in his April budget which were immediately jumped on by their respective industries.

The pasty tax was to add 20% VAT to hot pastry products such as pasties and sausage rolls and the caravan tax was to apply 20% VAT to static caravans.  The "climb down" will see 20% VAT applied to pasties if they're served out of the oven and 5% VAT added to static caravans.  Less than two months ago there was no pasty tax and no caravan tax, now we're going to have a pasty tax and caravan tax and this is being called a u-turn.

When he announced the new taxes, Osborne claimed it was a tidying up exercise to remove an "anomaly" in the tax system.  The truth is that it is compliance with EU rules on VAT and that's why some form of VAT is still being applied despite the opposition from voters and industry.  And remember, once VAT is applied it can't ever be removed under EU law.

One hypocritical Cornish Lib Dem MP, Stephen Gilbert, has been claiming partial credit for the supposed u-turn:
The Cornish people have won and there will be dancing in streets from Land's End to the Tamar as people hear that the Government has dropped their plans to clobber local people and local businesses with this tax.


Since the Budget, I have worked with the industry to find an alternative and I'm delighted that the Government has listened and agreed.
"The government" is the British government and the Lib Dems - his party - are part of the coalition.  His party are also even bigger eurofanatics than Labour and the Tories, determined to keep us in the EU that is responsible for the tax in the first place.
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