Media snapshots of Gordon Brown's eating habits reveal a man devoted to the serial consumption of Kit Kats. Our burly Chancellor certainly looks more like the sort of chap who would collapse in front of the TV with a mega-portion of popcorn and a can of cola than a jog-around-the-park/muesli-for-breakfast type. If he had wanted to dispel this impression, he blew a good opportunity to do so by not cutting VAT on fruit juices in his latest budget. 

Instead, Mr Brown chose to ignore the call from Innocent Drinks to reduce to 5% the rate of VAT on smoothies and fruit juices made from 100% pure fruit. Innocent clearly has a vested interest, but the company makes an important point. Two thirds of the British are still not consuming the recommended five portions of fruit and vegetable a day, despite all the government's entreaties. 

For fruit and veg refuseniks, a smoothie is certainly a whole lot more enticing than a pile of fruit in its whole state. Britain would obviously consume a good deal more fruit in liquidised form - Innocent calculates some 500 million more portions of fruit each year - if it weren't so expensive.

VAT at 17.5% adds about 50p to the cost of every litre carton of smoothie and fruit juice bought, effectively making it a tax on healthy living. Nevertheless the government clings to the antiquated justification that pulverised fruit is a beverage, not an 'essential' food, so it is up there with Champagne and chocolate as a frippery that can be taxed to swell Treasury coffers.

This argument looks more stupid still when most food and drink is zero-rated for VAT, even items such as chips, meat pies, doughnuts and beefburgers, the contribution of which to the nation's health is, at best, debatable.

How can the government justify not charging VAT on chilled carrot and coriander soup, (essentially liquidised vegetable) when it levies 17.5% on a mango and passionfruit smoothie (essentially liquidised fruit)? 

Let's hope the next Chancellor rolls up his (or her) sleeves and gets to work on breathing some strategic common sense into the ragbag of outdated assumptions, laced with exceptions, that currently make up our VAT regulations. 

And while we are at it, why not look at how we could use VAT as an instrument to encourage healthy eating ?

Topics