HARTLEPOOL MP Iain Wright today branded PM David Cameron’s “pasty tax” a farce which would hit the poor hardest and could lead to job losses.
He said the Prime Minister was “making it up as he goes along” and claimed the rules being laid down by Government in the move to add 20 per cent to the cost of hot pies and pasties sold by shops and supermarkets were “a Whitehall farce”.
Chancellor George Osborne revealed in his budget that the 20 per cent VAT will be added to all hot food, including pies, pasties, toasted sandwiches and other products which are “above the ambient air temperature at the time they are provided to the customer”.
The move was met with outcry across the country and leading chains have vowed to fight the VAT threat in an attempt to force the Government into a U-turn before it is introduced in October.
It will hit pasty and pie-lovers hard in the pockets, especially in Hartlepool, where there are five Greggs stores.
The town’s Labour MP showed his support for the takeaway industry by posing outside Morrell & Sons’ York-Road based premises eating one of the company’s pies, a popular cuisine among Hartlepool residents.
He said: “At times of economic difficulty this makes it even more difficult for both companies and customers and if prices rise there could be fewer customers in the shop.
“If food is hot when it’s served then it will be vatable, but if you buy one that’s been standing there cold then you don’t pay VAT.
“So are we going to have an army of tax inspectors coming into shops with big thermometers now? I don’t think it’s workable.
“It’s like a Whitehall farce.
“It’s just baffling, Cameron is making things up as he goes along.”
He said the price hike was “penalising the poor” and added: “It’s a tax on households, especially those in Hartlepool.”
He said the Greggs chain was a leading private sector firm in the region, but noted that shares had fallen by four per cent in the last week.
“This will undermine its ability to expand and grow and it is further pressure on the private sector in the North-East, which could lead to job cuts,” he added.
Richard Morrell, the fourth generation to run the Morrell family business, which was founded in 1872, said: “We already pay tax on hot food, it’s all included in the price and we try and keep prices as low as we can.
“If the bigger places like Greggs are fighting this and they win, it can only help us.
“But this does make it harder for the smaller businessman. At the end of the day they have to pass the rise on to the customers.
“The whole ambient temperature thing is crazy.
“It makes things awfully complicated, it’s going to be a nightmare.”
At Greggs, 18p will be added to the price of a 90p hot sausage roll and 30p to a £1.49 pasty and the takeaway tax means the price of goods such as hot rotisserie chicken at a supermarket will rise by £1.
But a shop can sell cold sausage rolls, pasties or cooked chicken, which are below the surrounding air temperature, without applying the sales tax.
However, Mr Cameron said the move would defend takeaway restaurants against competition from major chains.