Strawberry and cream sandwiches are the new jaffa cakes

CityAM reported earlier this week:

M&S has jumped on the bandwagon of the viral Japanese strawberry sando by launching its take, taking the internet by storm, but the sweet treat has raised the old familiar question about VAT.

The British retailer’s strawberry and cream (half) sandwich, wrapped up in its meal-deal packaging, is all over social media as shoppers race to taste the sweet sandwiches. Most are intrigued to know if the bread is the standard meal-deal bread or if it is sweet, as the Japanese typically use milk bread in their original version.

However, as the hype builds up, accountants and lawyers have been lighting up LinkedIn, questioning whether this dessert sandwich may be classified as confectionery.

If a food product is deemed a confectionery, it will be liable for 20 per cent VAT, compared to zero-rated, which most sandwiches typically fall under.

The mystery surrounding VAT has long persisted, following the famous ‘Is it a biscuit or a cake’ debate from the Jaffa Cake legal battle with HMRC.

The question of whether a particular food item is of one type or another, because different types attract different levels of tax, is exactly the sort of debate that New Zealand avoids through our very simple GST regime. With only a couple of exceptions, which are fairly well delineated (like residential housing rents, and financial services), every good or service that is traded domestically attracts the exact same rate of GST. There is no quibbling about whether a strawberry and cream sandwich is a confectionary, or whether a jaffa cake is a biscuit or a cake.

It is this simplicity that would be lost if advocates for removing GST from 'healthy foods', or all unprocessed food, or any other set of favoured goods, got their way. We'd then be left arguing over whether cut pineapple is a fresh food, or a processed food, or whether fresh and frozen pizza should be treated differently, or whether the set of ingredients on the pizza made a difference, and so on. You laugh, but witness previous arguments in the UK about whether a flapjack is a muesli bar or a cake, or in the US about whether a snuggie is clothes or a blanket.

Thankfully, for now, the government doesn't appear to have an appetite for messing with our simple GST.

[HT: Marginal Revolution]

 Read more:

• Judge rules that snuggies are blankets, not clothes
• Stephen Hickson on why we shouldn't remove GST from food
• We also shouldn't be debating removing GST from food
• Flapjacks, jaffa cakes, and the quiet simplicity of GST