"Pasty tax" was a popular phrase used by the British press to describe a proposal in the 2012 United Kingdom budget to simplify the tax treatment of "hot takeaway food" so that Value Added Tax (VAT) would be charged at 20% in all cases. The change would have increased the sale price of hot snacks such as sausage rolls and Cornish pasties sold on the premises where they were baked. The Chancellor of the Exchequer, George Osborne delivered the proposal of the so-called "March Budget".
Under long-standing VAT legislation, sale of most foods bought to eat or cook at home is zero-rated for VAT, meaning that no tax is charged. By contrast, meals bought and consumed in a restaurant, and hot take-away food or drink, are charged at a standard 20% tax rate. At the boundary between these two classes, there has been a history of legal challenges around food which is baked for sale, and is sold while still hot. If food could be claimed to be hot only incidentally, it could be zero-rated - this would apply to freshly baked bread, but also pies, pasties and similar items. [1] This legislation stated:
4.4 What about freshly cooked products?
If you sell freshly cooked products for consumption while they are still hot they are standard-rated, see paragraph 4.5.
Some of these products are, however, not sold with such an intention. They may only be hot/warm as they are in the process of cooling down. Examples include pies, pasties, sausage rolls and similar savoury products, cooked chickens or joints of meat, bread products and croissants. The liability will depend, therefore, on how you prepare and sell them.
If they are sold specifically for consumption whilst still hot (as a result of being freshly prepared, baked, cooked, reheated or kept warm), they will be standard-rated. See also paragraph 4.5
If they are sold warm simply because they happen to be freshly baked, are in the process of cooling down and are not intended to be eaten while hot; or cold or chilled at the time of purchase, they can be zero-rated.
4.5 What do we mean by ‘specifically sold for consumption whilst still hot’?
You sell food specifically for consumption whilst still hot if you either:
- have an established hot take-away trade and are selling the food as a part of that trade
- advertise it as either hot take-away food or in any other way which indicates that it is meant to be eaten while still hot
- sell it accompanied by napkins, forks, etc to enable it to be eaten before it cools
In the March budget papers, the Government published a paper [2] which claimed:
The borderline between hot takeaway food (standard-rated) and cold takeaway food (zero-rated) has for a number of years been the subject of litigation with some retailers arguing that the purpose of heating their food products is to improve their appearance or to comply with health and safety regulations, rather than to enable them to be consumed hot. This litigation has been decided on the facts of each individual case.
The document proposed to
apply VAT at the standard rate to all food which is at a temperature above the ambient air temperature at the time that it is provided to the customer, with the exception of freshly baked bread. This will clarify the rules in this area and ensure that all hot takeaway food is taxed consistently.
In response to the ensuing row, a number of campaigns were launched in order to try to prevent the tax rise on the Cornish pasty. These ranged from The Sun's "Who VAT all the pies" campaign to an online petition set up by the Cornish Pasty Association entitled "Don't Tax My Pasty". [3]
A Labour Member of Parliament (John Mann MP) asked the Chancellor of the Exchequer, Conservative MP George Osborne, about when he had last eaten a Cornish pasty. Osborne answered that he had no idea, and this answer was used to allege that the Conservatives had become "out of touch" with ordinary people. The Prime Minister David Cameron later said that he had recently eaten a Cornish pasty at Leeds railway station and enjoyed it. However, the West Cornwall Pasty Company outlet at that station had closed two years previously. [4]
The issue, which at first appeared to be unimportant, was then taken up by several other newspapers and political commentators. The VAT rise on the pasty would affect both these customers and the pasty industry itself: Greggs, the largest British bakery chain, warned that the tax would harm its business and lead to store closures, [5] and petitions to oppose the tax were signed by over half a million people. [6] These newspapers and commentators made fun of David Cameron's attempt to show himself as a regular pasty eater [7] (i.e. as one of the people) and George Osborne's inability to remember when he had last eaten one. [8] Cameron defended the proposition and said that the move would defend takeaway restaurants against competition from major chains. [9]
The "pasty tax" was one of the issues cited by Leader of the Opposition Ed Miliband when he labelled the 2012 budget an "omnishambles", a word coined by political comedy series The Thick of It . [10] The word saw continued usage in the media, [11] and was included in the Oxford English Dictionary in 2013. [12]
After the public opposition, Osborne significantly altered the plans in late May, which was characterised as a "U-turn". [13] A 2014 study observed that the "pasty tax" affair, although only a small change to the VAT rules, demonstrates that making changes to the VAT system is very difficult, and may itself have caused damage to VAT reform efforts. [14] A separate 2014 editorial argued that the backlash to the "pasty tax" and the Danish "fat tax" have made it unlikely for politicians to attempt to impose taxes on foods thought to cause obesity. [15] However, in 2018 the UK introduced [16] a "Soft Drinks Industry Levy", on sugary soft drinks. Specifically pitched as a tax to prevent childhood obesity, [17] the tax was more successful. [18]
Baked beans are a dish traditionally containing white common beans that are parboiled and then baked in sauce at low temperature for a lengthy period. Canned baked beans are not baked, but are cooked through a steam process.
A pasty is a British baked pastry, a traditional variety of which is particularly associated with Cornwall, South West England, but has spread all over the British Isles, and elsewhere through the Cornish diaspora. It is made by placing an uncooked filling, typically meat and vegetables, in the middle of a flat shortcrust pastry circle, bringing the edges together in the middle, and crimping over the top to form a seal before baking.
Fast food is a type of mass-produced food designed for commercial resale, with a strong priority placed on speed of service. It is a commercial term, limited to food sold in a restaurant or store with frozen, preheated or precooked ingredients and served in packaging for take-out/takeaway. Fast food was created as a commercial strategy to accommodate large numbers of busy commuters, travelers and wage workers. In 2018, the fast food industry was worth an estimated $570 billion globally.
A turnover is a type of pastry made by placing a filling on a piece of dough, folding the dough over, sealing it, and then baking or frying it. Turnovers can be sweet or savoury and are often made as a sort of portable meal or dessert. They are often eaten for breakfast.
Greggs plc is a British bakery chain. It specialises in savoury products such as bakes, sausage rolls, sandwiches and sweet items including doughnuts and vanilla slices. It is headquartered in Newcastle upon Tyne, England. It is listed on the London Stock Exchange, and is a constituent of the FTSE 250 Index. Originally a high street chain, it has since entered the convenience and drive-thru markets.
Ginsters is a company based in Callington in Cornwall, in the south-west of England. The largest pasty maker in the UK in turnover, it specialises in making mass-produced pasties, sausage rolls, sandwiches, pasta bowls and other savoury snacks. Since 1977, it has been owned by Mark and David Samworth.
A curry puff is a snack of Southeast Asian origin. It is a small pie consisting of curry with chicken and potatoes in a deep-fried or baked pastry shell. The consistency of the curry is quite thick to prevent it from oozing out of the snack. Pap or puff reflects the Fujian Chinese dialect 泡 ('pop'), which means 'bubble, blister, puffed'. It is a truly Southeast Asian snack as it has Indian, Chinese or Malay elements.
The European Union value-added tax is a value added tax on goods and services within the European Union (EU). The EU's institutions do not collect the tax, but EU member states are each required to adopt in national legislation a value added tax that complies with the EU VAT code. Different rates of VAT apply in different EU member states, ranging from 17% in Luxembourg to 27% in Hungary. The total VAT collected by member states is used as part of the calculation to determine what each state contributes to the EU's budget.
Obesity in the United Kingdom is a significant contemporary health concern, with authorities stating that it is one of the leading preventable causes of death. In February 2016, former Health Secretary Jeremy Hunt described rising rates of childhood obesity as a "national emergency". The National Childhood Measurement Programme, which measures obesity prevalence among school-age pupils in reception class and year 6, found obesity levels rocketed in both years groups by more than 4 percentage points between 2019–20 and 2020–21, the highest rise since the programme began. Among reception-aged children, those aged four and five, the rates of obesity rose from 9.9% in 2019–20 to 14.4% in 2020–21. By the time they are aged 10 or 11, more than a quarter are obese. In just 12 months, the rate is up from 21% in 2019–20 to 25.5% in 2020–21.
A sugary drink tax, soda tax, or sweetened beverage tax (SBT) is a tax or surcharge designed to reduce consumption of sweetened beverages by making them more expensive to purchase. Drinks covered under a soda tax often include carbonated soft drinks, sports drinks and energy drinks. Fruit juices without added sugar are usually excluded, despite similar sugar content, though there is some debate on including them.
Mr. Pastie ("PASS-tee") is a brand name pasty, a meat-and-potato turnover product. It is marketed by entrepreneur Garnet T. Sleep, Jr., owner of Real English Foods, Inc., based in Pen Argyl, Pennsylvania. Mr. Pastie is based on a traditional Welsh/Cornish recipe and has been called "the original fast food." It has been sold in US military commissaries, High's Dairy Stores, Weis Markets Wal-Mart, and 7-Eleven convenience stores.
Huff paste is a stiff pie shell made using a mixture of flour, suet, and boiling water. The pastry when cooked creates a tough protective layer around the food inside. When cooked, the pastry is generally discarded as it is virtually inedible. However, the shell becomes soaked with the meat juices and historically was sometimes eaten by house servants after the meal had concluded.
Cornish cuisine encompasses the cooking styles, traditions and recipes associated with Cornwall and the Cornish people. It has been heavily influenced by the geography of the county as well as its social history.
The June 2010 United Kingdom Budget, officially also known as Responsibility, freedom, fairness: a five-year plan to re-build the economy, was delivered by George Osborne, Chancellor of the Exchequer, to the House of Commons in his budget speech that commenced at 12.33pm on Tuesday, 22 June 2010. It was the first budget of the Conservative-Liberal Democrat coalition formed after the general election of May 2010. The government dubbed it an "emergency budget", and stated that its purpose was to reduce the national debt accumulated under the Labour government.
West Cornwall Pasty Company is a fast food chain in the United Kingdom specialising in making and selling pasties. The company was established in 1998 and has been owned by Mark and David Samworth since 2017.
In the United Kingdom, the value added tax (VAT) was introduced in 1973, replacing Purchase Tax, and is the third-largest source of government revenue, after income tax and National Insurance. It is administered and collected by HM Revenue and Customs, primarily through the Value Added Tax Act 1994.
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The Cornish Pasty Association is a British trade association, based in Cornwall, England. As of 2013 the association included about 50 independent bakers of Cornish pasties. The association successfully sought to have the name "Cornish Pasty" protected as one of the Protected geographical indications. Despite the resolution of the 2012 "Pasty tax" matter, the BBC has reported that some Cornish Pasty Association members are still unsure whether Value Added Tax applies to their baked goods.
A value-added tax (VAT or goods and services tax (GST), general consumption tax (GCT)), is a consumption tax that is levied on the value added at each stage of a product's production and distribution. VAT is similar to, and is often compared with, a sales tax. VAT is an indirect tax because the consumer who ultimately bears the burden of the tax is not the entity that pays it. Specific goods and services are typically exempted in various jurisdictions.
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