Mr Redwood’s contribution to the Second Reading of the Finance Bill, 16 April

Mr John Redwood (Wokingham) (Con): When the Government proposed VAT on pasties, did they feel they needed to do that to protect other VAT revenue on takeaways from European challenge? Is that what is in the Chief Secretary’s mind?

The Chief Secretary to the Treasury (Danny Alexander): No, that is not what is in our mind. It is one of a number of anomalies in the VAT system that we addressed in the Budget, although it is not actually a matter contained in the Bill. My right hon. Friend will be aware of the comments of, for example, the National Federation of Fish Friers, which makes the point that small independent fish shops, of which there are thousands around the country located in the constituency of every Member, have for many years been charged VAT on sales whereas other retailers have not. We are seeking to correct that anomaly.

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  1. Kevin Ronald Lohse
    Posted April 19, 2012 at 3:28 pm | Permalink

    The sensible way, especially in a time of austerity , high taxes and high unemployment, to correct the anomaly would have been to have reduced the VAT on takeaway food to the minimum, then imposed VAT on pasties at the same rate, thereby saving the coalition much angst for a very small sum. I doubt that such a solution was ever in the Chief Secretary’s mind.

    • Andy
      Posted April 23, 2012 at 4:46 pm | Permalink

      That’s fine and dandy but you then create yet more anomalies and you create another rate. I had no idea that Pasties were not subject to VAT. But I do think the agro over all the changes are really rather silly. Sorting out this anomaly was the correct thing to do, and so was freezing Age Allowance. But the more I look at this the more I think we should have a flat tax, few deductions and few exceptions, and at a low rate. Tax law has become so complex no one now seems to understand it.

  2. David Walpolr
    Posted April 19, 2012 at 4:44 pm | Permalink

    They could correct the fish shop anomaly by taken it off the hot fish not putting it on hot pasties. It is all food!
    On a separate point when can we expect water companies to lift hose pipe ban. My swimming pool has gone green and I need to clean it so my disabled wife can swim for exercise.

  3. Bert Young
    Posted April 20, 2012 at 2:46 pm | Permalink

    On the Mayoral election ; Boris is not just “entertainment vale” – he is a highly intelligent man , he has a particularly fine grasp of detail as well as a strategically oriented mind ; he does dress things up a bit and , he loves to crack a joke ; overall , he is a high value individual who deserves to be backed . While he was my M.P he had my enthusiastic support and I regret that he is no longer in Parliament ( I don’t think we have seen the last of him yet ). I witnessed the interview of the UKIP candidate on television and was singularly unimpressed , no surprise therefore that the polls show a lack of support . It will be a different situation in a National Election ; right-of-centre voters will show how disenchanted they are !

  4. forthurst
    Posted April 20, 2012 at 6:21 pm | Permalink

    “No, that is not what is in our mind. It is one of a number of anomalies in the VAT system that we addressed in the Budget”

    So HMRC were losing sleep over the untidiness of the current regime in which a baker’s shop were selling typical produce at higher than ambient temperature without the application of VAT? They were not afraid that the Brussels dictatorship would ‘force’ them to zero rate fish and chips and other takeaway food for the sake of consistency?

    What would be the situation with other typical baker’s produce which was at higher than ambient temperature because it had just been cooked? Does the shop need to hover over it with a thermometer until it becomes Vatable at the lower rate?

    • Mark
      Posted April 20, 2012 at 9:32 pm | Permalink

      We should tell the French they may only buy cold, stale baguettes and croissants, obviously.

  5. Lindsay McDougall
    Posted April 20, 2012 at 10:36 pm | Permalink

    VAT is the tax from which the EU automatically receives a proportion. You should not be so fond of it.

  6. waramess
    Posted April 21, 2012 at 3:46 pm | Permalink

    It is no more than evidence of madness that so much tme is spent wondering whether something is VATable or not. Charge VAT on everything at the same rate and be done with it. There will be plenty of howls but, in the end it will be worth the trouble.

    Personally I am not n favour of increasing taxes but there is one thing worse than increasing taxation and that is to spend time examining the entrails.

  7. James Sutherland
    Posted April 21, 2012 at 9:28 pm | Permalink

    The absurd demarkations, that mince served hot in batter is subject to VAT but mince served hot in pastry is not, a “biscuit” is, a “cake” is not – and I seem to recall some cold drinks may or may not be subject to it, depending whether they are for consumption on or off the premises. Like almost all UK taxes, I feel VAT is much too high, so I regret the anomaly was corrected so as to raise rather than lower the overall burden, but I’m glad it’s been corrected.

    In past years, doing my company’s VAT returns, I have found myself having to contact HMRC to ask the status of some items. When their official answer is that they don’t know the item’s tax status either, you know the system is flawed. I can buy a meal now, and the portion of the money I pay for service will have been taxed at least *five* times over: VAT, business rates, two ‘different’ bits of NI and finally the income tax. At least now they won’t be taxing the sandwich differently from the chips next to it on the plate…

  • About John Redwood

    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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