A consumption tax that was too hard to swallow

Columnist

Wednesday 30 May 2012

Personally, I can't stick pasties.

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Ian Bell

They have always struck me as a poor English excuse for a bridie, bulked up with – what are those things? – vegetables. Hunger has to be acute, and purveyors of fine Scottish pastry containers far distant, before I'll bother with a pasty.

I mean no offence to the good people of Cornwall. The fact remains that their beloved signature snack is just another example of the traditional European meal-in-the-hand. In Spain, there is empinada; among the Greeks, spanokopita; among the Armenians and Turks, boeregs. Each contains a hidden message. It says: only a very stupid politician would tax the people's food. In George Osborne, our Chancellor, we have the very candidate for that title. He said he was amending a mere anomaly with his pasty tax. Instead, in a Budget recognised instantly as less catchy than a British Eurovision entry, he managed to outrage all the Tory tabloids, otherwise known as "public opinion".In one breath, the very rich were granted a very big tax cut (if they had been naive enough to pay much tax to begin with). In the next exhalation, Mr Osborne was picking on White Van Man's simple meal. The political point, the one generally covered in lesson one, was that Mr Osborne was oblivious to symbolism, never mind economic effects among the hard-pressed. He was inept.Had anyone been paying attention, it was a lesson in the perils of consumption taxes. Politicians love them. They deliver quick returns by soaking the majority without endangering the wealth of a minority. As is often observed of the ultra rich, there is a limit to the reservoirs of vintage champagne an investment banker can drink. There is no limit to the regressive taxation you can apply to the rest if they want to – for self-indulgence knows no bounds – eat.Anomalies arise, however. Yesterday, we heard that Mr Osborne had been "listening". Chiefly, he had been listening to the sound of whimpering Tory back-benchers. They had noticed that the contrast between a pasty tax and the treatment of the rich was, even for them, blatant. So their Chancellor abandoned one nonsense and produced another. Pasties have been liberated retrospectively; VAT will still be levied on rotisserie chicken. Huzzah.Having forgotten its own adventures with taxes on existence, Labour nominated Mr Osborne's panic as a shambles. That would be the half of it. The attempt to paddle back up a U-bend of his own devising was not the best advertisement for the Chancellor's vaunted cleverness. If he can't digest the consequences of a hot-snack tax, how reliable is his handling of the public sector borrowing requirement?For the Coalition, it gets worse. A good PR would have told Mr Osborne that his pasty tax was a disaster, but added that the worst had been endured. The best bet would have been to leave the issue alone. Instead, by reversing himself now, the Chancellor revives the tale. He advertises his panic. This speaks of a Government that is, technically speaking, all over the shop.A man taking the trouble to worry over his treatment of pastry products is probably not the man to respond to a collapse in Spanish banking. A man who fails to understand that VAT is never politically neutral undoubtedly fails to understand what is meant by the real economy. His grasp of precedent might also leave something to be desired.In his autumn statement, Mr Osborne froze an increase in fuel duty until this August. No-one cheered. Equally, none of the Chancellor's extra-special advisers seems to have warned of the troubles inherent in his decision. It seemed to say he could live without the revenue. Now, having dropped his pasty tax in the gutter, he tells anyone interested – and that would be all of us – that he will cave under pressure.White Van Man will not be grateful for his pasty rebate if fuel goes up by 3.02p a litre come August. No-one dependent on a motor vehicle will be inquiring about the state of the public finances when Mr Osborne's 1p "cut" has already been wiped out by the VAT increase. The cost of transport is another of those consumption taxes employed by finance ministers the world over. It is therefore subject to populist tides.Who gets taxed, and why? The double question is lost in the political shuffle. Sometimes people detect a surreal, near-irrational nonsense: the price of a pasty has to go up, says George, because the banks took half a trillion of our money. Then the price of fuel – dropping, in Mr Osborne's beloved markets – has to rise because, first, he couldn't be bothered to tax the very rich; secondly, because needed money is pumped straight into his Treasury. A fuel tax is another of those existence taxes. It has nothing to do with wealth, or with the ability to pay. If your petrol becomes too dear, you cease to drive. Should that mean the end of your white-van business, that matters little, apparently, to someone who runs something he calls "the economy". Console yourself with a pastry product instead.In any discussion of posh boys liable to be out of touch, Mr Osborne is emblematic. This is, in fact, slightly unfair. The Chancellor instead represents an attitude towards the economic business of government that is common to the entire political class. Labour or Tory, they don't eat pasties; they don't worry about the cost of petrol; they don't imagine that the less-prosperous would ever rebel over the terms offered.You have to imagine the mind that would set teams of civil servants to work over the question of ambient temperatures and pastries while relieving the very rich of their minimal obligations. Then you have to wonder about a population that sees nothing odd in this 21st-century tax farming. Peasants are slow, sometimes, to catch on.Mr Osborne will have his Bastille, bathetically, if he pushes drivers too far this August. The questions over taxation's why and how will be forgotten, yet again. Only one fact remains. The Coalition Government does not understand the country it claims to govern.

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A consumption tax that was too hard to swallow

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