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Osborne - bit creepy

In the UK’s so-called Emergency Budget Chancellor George Osborne announced a rise in VAT to take to 20%. Only a couple of weeks ago the Prime Minister said there were ‘no plans’ to raise VAT, which is slightly irritating when it was clear that there were flames coming from David Cameron’s pant region.

We know that politicians lie – Lies lies lies doesn’t deal with politicians because it’s too easy, but we can deal with the principle of Value Added Tax.

We do have a problem with this term. Where exactly is the ‘added value’ when you pay more for exactly the same thing?

It’s accepted that death and taxes are two of the certainties in life – you can’t get around either of them unless of course you are Dr Who.

So what of VAT?

Here’s a quick history lesson.

A German industrialist Dr Wilhelm von Siemens came up with this bright idea early in the 20th Century. The Krauts waited for a while – presumably concerned about the bad PR it might generate – then in 1954 Maurice Laure, Joint Director of the French Tax Authority, introduced it to the French. In France VAT accounts for 52% of state revenues.

Ted Heath’s Conservative government followed suit in 1973 but resisted the temptation to make it quite so onerous. In Britain VAT accounts for one third of  revenues and not all products are subject to VAT – training bras and Jaffa cakes are exempt. Seems that if you are growing breasts or have a penchant for unfulfilling fare that doesn’t do well when dipped in a cup of tea, then you are quids in.

The Jaffa Cake was a bone of contention when the previous Tory government was in power, however. The then Government argued that the Jaffa was not a cake, but  merely a biscuit, which is in fact subject to VAT. McVities went to court arguing that the Jaffa was a ‘miniature cake’ and won the case. The biscuit company proved that the Jaffa was a cake, arguing that when it goes off it goes hard, whereas a bona fide biccy goes soft when it’s best days are over. Then they made a 12-inch Jaffa to just to underscore the it’s-a-ruddy-cake-for-goodness’-sake point.

After that McVities got on with the very important task of measuring the exact amount of ‘Hob and ‘nob’ in a Hobnob.

Hang on, where am I?


Right, so what’s the point of this? Well, whatever the product there is no ‘value’ added in this tax: the reality is you get less value for what you paid for with this infuriating add-on.

So let’s just call this Added Tax or AT. It doesn’t sound so good, but it is telling the truth.

More Jaffa Cake news next week.