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| 'Pasty lover' David Cameron defends VAT hike | 'Pasty lover' David Cameron defends VAT hike |
| (40 minutes later) | |
| David Cameron has said he "loves a hot pasty", but defended the decision to slap VAT on all sales of the snack. | David Cameron has said he "loves a hot pasty", but defended the decision to slap VAT on all sales of the snack. |
| The prime minister told a press conference ministers had to make sure the VAT rules were "fairly applied". | The prime minister told a press conference ministers had to make sure the VAT rules were "fairly applied". |
| He said small businesses had paid the tax on their takeaway food for many years, but big supermarkets did not. | |
| The move, announced in the Budget and dubbed the "pasty tax", would see all food sold "above ambient temperature" carrying 20% VAT. | The move, announced in the Budget and dubbed the "pasty tax", would see all food sold "above ambient temperature" carrying 20% VAT. |
| VAT is not charged on most food and drink - they are described as zero-rated - but it is payable on takeaway food sold to be eaten hot. | |
| However, baked goods which are put on display warm and subsequently cool down are also zero-rated, and the government says some retailers and bakeries have argued their food is sold hot to improve its appearance, or to comply with health and safety regulations - not for consumption that way - and therefore should not attract VAT. | |
| 'Pasty eater' | |
| At a press conference for the London Olympics, Mr Cameron said that since VAT on takeaway food was introduced 20 years ago there had been "a number of businesses trying to find ways around that rule and fighting court cases". | |
| "What the government has to try and do is make sure the VAT rules are fairly applied," he said. | |
| "I don't think it's fair, for instance, that the small businessman running the fried chicken takeaway is having to charge his customers VAT, but the big supermarket is not having to pay VAT for their fresh hot chickens. | |
| "It's basically about trying to have a sensible set of VAT arrangements where the boundaries are sensible." | |
| The PM continued: "I am a pasty eater myself, I go to Cornwall on holiday, I love a hot pasty. | |
| "I think the last one I bought was from the West Cornwall Pasty Company. I seem to remember I was in Leeds station at the time and the choice was whether to have one of their small ones or large ones, and I have a feeling I opted for the large one and very good it was too. | |
| "But I would be pretty sure that would be already paying VAT because it was hot takeaway food." | |
| Job losses | |
| The prime minister's love for a pasty does not appear to be shared by his chancellor. | |
| When George Osborne appeared before the Treasury select committee on Tuesday he said he could not remember the last time he had bought a pasty from the food chain Greggs. | |
| The company has led criticism of the pasty tax, and its chief executive Ken McMeikan told the BBC's Newsnight on Tuesday it would seriously damage the industry and cause job losses. | |
| "I think to a degree they have lost touch with the issue here - that for ordinary, hard-working families putting 20% on to a product that is freshly baked actually is going to make a severe dent in their pockets when they can ill afford it," he said. | |
| "George Osborne, I think, would benefit from coming and spending time with us and spending time with our customers." | |
| If the new rules are passed, all food sold at "above ambient temperature" will attract VAT - although the definition of that temperature has not so far been made clear. | |
| Mr McMeikan said the issue of temperature would create "huge complexity", and during the select committee hearing, Labour MP John Mann agreed. | |
| "With the weather as it is today, a lukewarm pasty from Greggs is not VAT-able because the ambient temperature outside is the reference point, whereas if it is the middle of winter and freezing cold it is VAT," Mr Mann said. | |
| "It is an extraordinarily complex situation when you are having to check with the Meteorological Office on whether or not to add VAT on pasties in Greggs." | |
| Pressed on whether the move was fair, Mr Osborne said: "If it's cold when you buy it, it will not be VAT-able." |