The 'pasty tax' farce has diverted us from the real issues

Girl eating a pastyLet's face it, tax is a pretty boring topic but this week it has never been more interesting thanks to the introduction of a 'pasty tax', the story of which has gone from bonkers to farce.

It started when Chancellor George Osborne used the Budget to close down a VAT loophole.Under current rules, food you buy in the supermarket is VAT exempt but buying hot takeaway food such as fish and chips is VAT-able, meaning the food incurs a 20% tax that is already factored into the price.

However, post-Budget freshly baked foods were exempt from VAT – which includes pies, rotisserie chicken, sausage rolls and, of course, pasties (hence the pasty tax name).

The Treasury has now closed this loophole and now says that all hot food should be VAT-able, although there has been some confusion about what constitutes hot.
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The Treasury describes hot as 'above ambient room temperature when provided to the customer'. There are some clever clogs that has questioned whether someone in the beginning of the queue at Greggs would pay more money for their pasty than someone at the back of the queue who will get a pasty that has cooled right down.

The pasty tax is due to bring in £50 million in this financial year and increase until it reached £120 million in 2016/17. This isn't an unsubstantial amount of tax - and just for reference, £50 million would buy you 35,714,285 Greggs' Cornish pasties, at a cost of £1.40 each.

The real problem I have with the pasty tax is not the few extra pence it will add to the price of a cheese and onion bake but how easily distracted the British people are from real problems.

Even at the biggest stretch, taxing Greggs could be seen as a tax on the poor but shouldn't people be more outraged about the 5% tax cut that the super rich have just been handled?

When a Downing Street press conference centres around the prime minster trying to remember the last time he ate a Cornish pasty, the Labour leader can't get into a Greggs quick enough for a photo opportunity, and Cameron's pasty has it own Twitter account, we know that 'pastygate' truly has descended into farce.

You could argue that people don't understand tax but they understand how much things cost and pastygate is a good way to get people interested in economics.

But in reality, the politicians have done a good job diverting our attention from granny tax and tax breaks for the wealthy - @CameronsPasty should be proud.

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