Greggs turns the heat up on Chancellor’s ‘pasty tax’

BAKERY chain Greggs is to step up its opposition to the Chancellor’s so-called “pasty tax” this week as it unveils a trading update two days before the end of industry consultation on the issue.

Chief executive Ken McMeikan has been a high-profile opponent of George Osborne’s proposal, unveiled in the Budget, to extend 20 per cent VAT to hot food served by bakeries and supermarkets.

The Treasury said it will create a level playing field with the likes of burger bars and fish and chip shops, which already have to charge VAT on takeaway sales.

But ahead of Wednesday’s interim management statement to the stock market and the close of consultation with the food industry on Friday, McMeikan told Scotland on Sunday there was “a better solution” to the problem.

He said: “We believe the solution is for VAT to be charged on all food kept hot for sale in a heated environment after cooking, all food heated or reheated to order and all food supplied in heat-retaining packaging.

“This will very clearly differentiate between fresh bakery food and food that is being sold intentionally hot.”

The Greggs boss said that if the UK government adopted this policy following the consultation it would “remove any anomalies” in the hot takeaway food industry “and make the tax legislation much simpler for the government, businesses and the consumer”.

McMeikan helped deliver nearly half a million signatures to Downing Street last month, claiming that the tax is unworkable, would hit the poor hardest and may further damage the high street.

In March, the company – which sells bread, cakes, sandwiches and savouries to six million customers a week – revealed a 1 per cent increase in pre-tax profits to £53 million in 2011.

Total sales rose by 5.8 per cent to £701m, reflecting 84 store openings and some product launches. The company, which has 1,550 shops, plans to open 90 outlets in 2012, creating up to 800 jobs.