British government rethinking new 20% sales tax on hot savory snacks after critics say such a move would unfairly attack the poor
May 29, 2012
– Britain's government has cooled on its plan to impose a new sales tax on hot savory snacks, such as the humble Cornish pasty and sausage roll, after being criticized for unfairly attacking the poor.
The country's Treasury confirmed Tuesday that it has amended plans announced in March's annual budget to close a loophole, which allowed some heated takeout items to escape a 20 percent sales tax.
Ministers repeatedly insisted the plan was necessary to raise new revenue, and to bring tax on snacks in line with the levies imposed on the nation's other favorite takeout dish, fish and chips.
In a complicated — and potentially confusing — change to its original plan, the Treasury said a 20 percent sales tax would now be levied only on cooked pies and pasties, which are then kept hot deliberately.
It won't apply to baked goods which are sold after leaving the oven, but happen to still be warm. Under the original plans, cold items were always intended to be sold without having the sales tax added.
The Treasury said it had also altered plans to impose a 20 percent sales tax on trailers — known as static caravans in Britain — amid sharp criticism from manufacturers, who warned the policy would cost jobs at a time of meager economic growth.
A levy of 5 percent will now be charged on sales of new trailers — often purchased as holiday homes.
The changes, which will cost the Treasury about 70 million pounds ($110 million), follow a raucous campaign against the plan, led by Britain's tabloid newspapers and one of the country's leading bakery chains.
It represents the second misstep by Prime Minister David Cameron over the so-called "pasty tax" — though declaring himself "a pasty eater," Cameron became confused over where exactly he had last purchased one of the hot snacks.
The savory treat, a combination of meat and vegetables carried in a pastry crust, is synonymous with Britain's working class, and is said to have been invented as a lunch dish for tin miners in Cornwall, southwestern England.
Chris Leslie, a lawmaker and economic spokesman for the main opposition Labour Party, said the government had bowed to public pressure.
"They are not U-turning out of the kindness of their hearts, it is because they are being forced to do so," Leslie said. "What a chaotic way to run a country."
Bakery chain Greggs PLC welcomed the development. Its chief executive Ken McMeikan said the change was "fantastic news for the customer" and claimed it would safeguard jobs. Greggs share price was up nearly 7 percent on the news.
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