VAT is rubbish - discuss

Here's the question: is it right for smoothies and juices to be taxed, when most other food isn't?

Obviously, as makers of fresh fruit drinks, we're a little biased. At present, we're trying to work out how a government that encourages people to eat five portions of fruit and veg a day can still charge 17.5% tax on 100% pure fruit juices. It doesn't make sense.

Go to the supermarket today and you don't need to pay VAT on the vast majority of food and drink (for the benefit of non-UK readers, VAT = sales tax). That means a 0% VAT rate is applied to all "essential" foods whether it's doughnuts, frozen chips, meat pies or beefburgers. Yet all "beverages" are taxed at 17.5% - classed as non-essential, beverages are exceptions to the zero-rate that's applied to food.

More here in our Guardian column, but the question remains - should you have to pay VAT on our drinks? Are beverages non-essential? Feel free to comment...

Comments

[Anita]

Wow this was something I didn't know. How ridiculous given the current push on health and nutrition that something that is good for you should be at a fiscal disadvantage!

I can understand a tax on alcoholic beverages but not on fruit juice. And how do they deal with the fact that the essential components of fruit juices would, on their own in their original form, not be taxed yet once converted into a beverage they are. Weird...

[arthur]

A lot of bottled water companies have made the same argument - on the one hand people are told to drink their 2 litres a day. On the other, governments have introduced/kept taxes on pre-packed drinks - in other words, bottles of water that you have to take to school or work instead of carrying around your own glass.

Contradiction? Maybe. It does take around 20000 times as much energy to get water into/out of a bottle than it does with a tap (read that in the guardian too, so it could be a typo). And maybe it's the same with fruit. There is a difference between an apple and an apple that's been turned into a drink.

Other thing is that VAT is 'value added tax'. As soon as you take a raspberry, turn it into a drink and sell it you're adding value to it. (Same as if you cook a turkey twizzler and serve it in a restaurant.)

Don't get me wrong, I'm totally into cheaper healthy things, especially if they taste as good as your drinks. Just find the reasoning isn't quite right. Still, no harm in trying I guess.

[gil bomber]

Of course it's daft that Turkey Twizzlers are VAT-free and healthy fruit drinks aren't - why not post a link to the mail your MP site: www.WriteToThem.com so that people can do just that?

[Colin]

Totally, I think VAT should be removed on all drinks where the only content is fruit and veg.
I dont think the 'value added' deal applies, e.g whats the difference between a potato thats been turned into a chip and a stawberry thats been turned into a smoothie?
Would there be VAT on it if it was pureed? Get Jamie Oliver on the phone...He could sort it out.

[Joanne]

If fruit is VAT-free, and fruit is the only thing in your smoothies, then they too should be VAT-free!! Let the government charge VAT on those other smoothie companies who are not 100% fruit, and use concentrate or additives!

[Bananagirl]

Absolutely NO NO NO NO NO! How can they possibly charge tax on your health mad smoothies??? Now, let's face it, they taste so good one would think maybe they should have some kind of "punishment" in the form of a tax...But lets look at this logically. Of course they shouldn't charge tax on uber health drink when they don't add it onto "Cardiac Arrest" food!!!

[Alex]

That's disgraceful! They won't tax junk food but they slap it on smoothies?
And it's such a mystery why obesity is on the increase?

What is up with the universe!

[Chloe]

Is that why fruit juices/smoothies are so expensive?! That is ridiculous! I never knew that.
You should open your own airport tax free smoothie shop.

[Frankie Roberto]

How are beverages classified? Is there any way you can start labelling your drinks as 'food' in order to get around the problem?

The difficulty in changing the law would, I guess, be in how you define a smoothie. Is adding ginger okay? How about water? Or herbs? or corn starch? Or sugar?

[Janet]

It's absolutely disgraceful to charge VAT on fruit and vegetable drinks.
The government of this country is completely mad - on the one hand they spend millions on promoting healthy food and on the other hand say there's not enough money to implement the changes to school meals (as championed by Jamie Oliver)in order to encourage our children to make healthy choices. Then they tax health drinks such as yours?????
Unbelievable!

[alex]

I think that if we make enough noise about this it will be changed... there is no logic. When I'm thirsty and in the shop its always the drinks that are worst for you that are by far the cheapest... However I would like to be reassured that if the law was changed, the smoothie price would be lowered rather than taking the extra profits or something. or no.

[monkeychops]

I didn't know this either, what a disgrace. Good link by the way, Arthur, come on everyone; tell your MP!!!

[Uri Baruchin]

it seems this entire area of the VAT tax policy is filled with absurdities. i learned yesterday that cakes are exempt, but chocolate biscuits are taxed, because for some ancient reason they are considered a luxury product. and apparently jaffa cakes went to law to be considered a cake and not chocolate covered biscuits.

[Helen]

What is the VAT status of milk? I reckon your smoothies should be in the same category. Both are pure, squeezed juices: in the case of smoothies, skin and pips get left behind; in the case of milk, the cow and udder remain in the milking parlour!

I also think it might be possible to have your wonderful smoothies classified as food. After all, no water is added, and the content is no different from the fruits in their original form, except for the loss of the bits that won’t liquidize. Some of these, you would peel off or spit out anyway, if you were chomping the fruit for yourself. When I drink them, I think of them more as an easy way to eat a whole bowl of fruit than as a drink! They are more food than drink — as is milk.

[a mum]

I've written to my MP and he's written back to say it would open the floodgates because Guinness and Horlicks are healthy drinks. Needless to say I've written again - ridiculous to slap tax on a fruit just because it's been squashed!

[Petet Mason]

I work in VAT and the BBC just asked me about this. Having worked in France on VAT matters it is clear that the policy of lower tax on foodstuffs came in in the early 1960's under Charles de Gaulle, so that poorer people did not get taxed more as a percentage of total income. Lines have to be drawn somewhere, between basic foodstuffs and so -called "luxuries" and degree of food preparation and combination seems to be part of turning necessities into luxury items! Wish you luck, you may get it to 5%, but essentially you may need a wartime leader angle on this, something Churchillian perhaps. He did say there should be no tax on reading matter, and that policy angle has also survived to this day in respect of the VAT zero rate for reading material. I had a quick look to help you and found that he also said that the British soldier had survived well on beef and tea rations for 200 years, so there was no need to change that. Accordingly I think there are good grounds for going for the lower tax rate, since tea is also a combined drink of infused tea leaves and milk.

Drink to victory then !
Good luck in your endeavours

Peter Mason
VAT Consultant CMS Cameron McKenna

[Ruari McCallion]

Blimey, you're still at it!

You know perfectly well - because it's a point I've made to you before and you have accepted - that VAT is charged on all processed foods. I have on record your response to my previous complaint about your e-petition, that it's misleading. You were very apologetic then but you're still doing essentially the same thing.
Smoothies are not being singled out and you have not made a proper case for exemption. If people want VAT-free smoothies then buy fresh fruit, take them home and use the blender.
You're providing a service, on a commercial basis, that saves time and provides fruit in a palatable and easily-consumed way. How, pray tell, does that differ from, for example, Bird's eye Fish Fingers, which provide fish (a vital source of Omega-3) in a convenient, processed form?
I have no objection to your service offer but don't pretend it's other than a commercial operation - it's misleading, just like the ad you were pulled up on is misleading. You're not the inheritors of Mother Teresa, you're a business. No objection to that but strong objections to economies (or carelessness) with the truth.
I hope you've pointed out to gil bomber that Turkey Twizzlers are not VAT-free. Nutrition-free, possibly, but not VAT-free.
Or does that sort of correction not suit your commercial purposes?

[Ruari McCallion]

No response to the above? Come on, I dare you. Spot the error and take me to task about it.

[osteoporosis exercise]

And maybe it's the same with fruit. There is a difference between an apple and an apple that's been turned into a drink.