Teaching Comparative Government and Politics

Thursday, April 05, 2012

The pasty tax and class warfare

If the government raises taxes on a popular inexpensive take away food and lowers taxes on the richest Britons, is that class warfare or just bad politics (in the public relations sense)?

A Tax on Snacks Aggravates Austerity Tensions in Britain
George Osborne, the posh chancellor of the Exchequer, confesses he cannot recall the last time he partook of a pasty, the calorie-busting savory pastry, served hot, that is beloved by millions of average Britons.

That may well explain why Mr. Osborne’s recent decision to impose a sales tax of 20 percent on pasties and other takeout snacks — while cutting the top income tax rate on financiers and other highly paid Britons — has created such a furor here.

The tax controversy, which the British press has called, inevitably, “Pasty-gate,” has come to symbolize the increasingly vitriolic debate in Britain over who should shoulder the burden of the government’s drive to cut debt and spending…

The new tax, announced last week as part of the government’s austerity budget, was aimed at closing a loophole that exempted hot, freshly baked takeout foods, like pasties, pies, toasted sandwiches and rotisserie chickens, from the point-of-sale tax known in Britain as the value-added tax. Under the new budget, which effectively becomes law immediately, the price of such items will henceforth include a value-added tax of 20 percent…

As the economy continues to sag, Mr. Osborne’s clarion call that “we are all in this together” is beginning to ring hollow for a British public battered by high gasoline prices, a dormant job market and, now, more expensive pasties.

It has long been expected that the party in power would suffer political consequences as the public feels austerity’s bite. But Mr. Osborne has been betting that the prospect of economic recovery would be enough to convince voters that the current Conservative-led coalition government was better positioned than Labour to improve Britain’s parlous finances and make the economy more competitive on world markets.

That, in fact, was the stated impetus behind Mr. Osborne’s central budget measure: cutting the top tax rate to 45 percent from 50 percent. Many economists have supported such a rate cut as essential to attracting more investment and bolstering London’s claim to be world’s leading financial hub.

Mr. Osborne proposed to pay for the cut in part by increasing the fees that the wealthy pay when they buy and sell expensive properties in London.

Other revenue-raising measures, however, affected the middle class, including the scrapping of tax allowances for retirees — a change that was quickly labeled the granny tax — and the snack-food levy, perhaps forevermore known as the pasty tax.

Inflaming the debate is not only that the chancellor announced the tax, but how he has defended it.

At a parliamentary hearing Wednesday, Mr. Osborne was asked when he had last sampled a pasty at Greggs, a nationwide bakery chain that specializes in the delicacy.

The chancellor, who in public settings can come across as haughty in comparison with the more glib Mr. Cameron, scrambled for an appropriate response before acknowledging what, by then, had become obvious to all: he does not frequent the chain…

The dispute threatens to set back Mr. Cameron’s signature accomplishment as prime minister — detoxifying a political brand that in the post-Thatcher years had become closely linked with policies that favored the better-off…

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