BUDGET REACTION
Pasties, cigarettes and alcohol Rebecca Hubbard looks at howthe industry has reacted to the Budget’s latest set of announcements
Who knewthatwhen itwas time for George Osborne to open up his red briefcase once again, that the announcementmaking some of the biggest headlines in the countrywas to dowith an innocent pastry-wrapped parcel of goodness? Notme.
caused our humble PrimeMinister DavidCameron to come out as a pasty lover. Thanks for that,David. But lets not let the pasties have
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all the fun.We had other announcements that affect the world of FMCG, including increased levels of duty on cigarettes and alcohol aswell as increased recycling rate targets. Butwhat does this allmean and
ut it did,with headlines hitting the national press left, right and centre. It even
what reaction has taken place? FMCGNews takes a rummage in George’s battered briefcase.
PRAISE THE PASTY Inwhat has nowbeen dubbed the ‘pasty tax’, George announced to the UK on the 21stMarch that “VATwill apply, to the extent that it does not already do so, to the sale of hot food, cold food consumed on the supplier’s premises, sports drinks and holiday caravans, and to the rental of hairdressers’ chairs.” Obviously, the hairdressing part doesn’t matter here. Or the caravans. Instead,we nowhave a change thatmeanswhat is normally considered cheap food,which can be found in popular places such as Greggs and supermarkets,will nowgo up in price. Themost popular example given is that of a
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Greggs sausage roll. Currently 90p in price (which I swearwas cheaperwhen Iwas at University, but that’s inflation for you)will nowhave 18p added to it. Meanwhile, a Cornish pastywill have a 50p price increase. Themove comes as the
Government decides to close the loopholewhich previously allowed hot food to escape the 20 per cent VAT placed onmost other products. Thismeans that the humble chains of Greggs and theWest Cornwall Pasty Companywill nowhave to charge their customersmore. However, some issues have
already been foundwith the classification of “hot food.”Osborne loosely claimed it as food sold above ambient air temperature. But, as LabourMP JohnMann asked himin a debate following the
Budget: “If I buy a pasty from Greggs that is cooked hot but by the time it gets in the paper bag and I take it away it’s cool,would it beVAT-able or not?”MrOsborne, whilst noticeably squirming, simply replied: “If it’s coldwhen you buy it, itwill not be.” This thereforemeans that products that are cooked and then cooled before purchasewill not beVAT-able,whilst those products that are kept hotter than the air outsidewill be.However, as many have stated -what ifwe were suddenly come upon by a heatwave? Surely the pastrieswill then be of the same temperature as the air outside -making themby definition, nonVAT-able. The easy way to remember it is:Acold sausage roll is nonVAT-able. But a hot one is. Such inconsistencies in the rules ledMrMann to say to the
© 2012 Sean Reidy
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