The “fat tax” imposed on foods high in saturated fat is being fought by the biggest bakery chain in Britain, who say taxing the sausage rolls and pasties it bakes in store is unfair.
Greggs bakery will take the Chancellor George Osborne’s decision to impose the Value Added Tax (VAT) on its hot products to court in the next six weeks.
The bakery chain, which has 1500 stores across the UK, has lost £30 million value in its shared after being reclassified as hot food.
Hot food is subject to the VAT, while cold food is not, and chief executive Ken McMeikan told Sky News the change is unreasonable.
“The consumer needs help in making their money go as far possible, not to see an increased tax on something they didn’t have to pay tax on previously,” he said.
Osborne released his Budget last week, which included changes to certain loopholes which allowed some foods to be exempt from the tax.
“At present soft drinks and sports drinks are charged VAT, sports nutrition drinks are not,” he said.
‘Hot takeaway food on high streets has been charged VAT for more than 20 years, but some new hot takeaway products in supermarkets are not.’
Greggs argument is that while it bakes its sausage rolls in-store, it does not make any effort to keep them warm once they’re removed, so they should not be classified as hot food.
McMeikan argues the changes were made without consultation with businesses, and he will meet with government representatives next week to discuss the issues.
‘We will be fighting this all the way,’ he said.
‘At a time when the consumer is under enormous pressure and at a torrid time for the high street, this felt like a tax measure that has been ill thought through and the timing could not be worse.’
It’s no wonder Greggs is planning to argue the tax on its ‘hot foods,’ as the company sells two million sausage rolls alone every week.
Greggs and the National Association of Master Bakers, who have collaborated to launch a legal bid against the decision, will have six weeks to take the matter to court.
It has also been suggested as a possible way to improve health and nutrition in Australia, among other countries.
Some Australian doctors also want warning labels on energy drinks, while a US study found a tax on sugary drinks could save 26 000 lives per year.