Innocent and Asda have vowed to continue their campaigns to persuade the government to slash VAT on smoothies and fruit juices.

This week, the government delivered a major blow to the two camps when it announced it had no plans to reduce the rate despite calls for it to be cut from 17.5% to 5%.

"To date the government has been sparing in its use of reduced VAT and has only applied these where they are affordable, and provide the most effective and best-targeted support for government social objectives when compared with other policy instruments," the government said in response to Innocent's online petition on the 10 Downing Street website.

The 2004 report, Securing Good Health for the Whole Population, had highlighted "difficulties of principle and practice in any attempt to use the tax system to influence diet," it said, adding: "European VAT rules require that in most cases the same rate is applied to all competing products. This limits the extent to which any new reduced rate could be targeted on the most healthy fruit drinks."

The government had already taken action to encourage people to eat healthily through 5-a-day and the School Fruit and Vegetable Scheme, front-of-pack food labels and advertising restrictions, it added.

Innocent and Asda reacted angrily to the news. An Innocent spokeswoman said: "We intend to write to the chancellor and prime minister to express our disappointment."

Asda, whose own e-petition is backed by more than 6,700 people, said it would continue to press for a rate cut. "We are going to continue to fight and support is growing all the time," a spokesman said. "It is unfair that you can buy a bowl of fruit VAT-free but if you buy it liquidised it costs you 17.5% more."

Asda had received an invitation from treasury minister, Jane Kennedy, to meet the government to discuss the issue, he said.

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