"When is a biscuit actually a cake?" Britain's Value Added Tax (VAT) rules have long been the butt of such jokes.
VAT rates in the UK have variously been described as "mysterious" and "absurd", said the BBC, but the duty remains central to the government's tax-and-spend plans, bringing in £168 billion to the Treasury last year.
What is exempt? There seems little rhyme or reason why some goods are charged at the standard rate of 20%, and others at 5% or zero.
Biscuits are an especially "tricky tax terrain", said The Economist. A McVitie's chocolate digestive, for example, faces a 20% VAT levy owing to the "overindulgent chocolate coating", while a plain one is "unscathed" at 0%. Famously, a 1991 court ruling found Jaffa Cakes to be biscuits, despite their name, and therefore also exempt from VAT.
Women who have undergone surgery for breast cancer are exempt from paying VAT on their bras. But campaigners say everyone should be exempt since bras are a basic necessity.
Why are some goods VAT-free and not others? The argument for VAT exemptions is primarily based on fairness, as cutting the levy on "essential" goods helps the poorest in society. But this does not always stack up. Toilet paper is deemed to be "luxury goods" and is charged at 20%, while caviar and helicopter rides are classed as "essentials" and are VAT exempt.
The £247 million that the toilet roll levy rakes in for the Treasury each year may be "pennies to the government", said the Daily Express, but it "has a much greater impact on UK households, and disproportionately affects the most vulnerable in our society".
Does the system work? Despite the estimated £40 billion that would be raised by bringing the UK into line with the OECD average for VAT reliefs, political considerations have long stymied any serious reform of the system.
"Wholesale reform", rather than "piece-by-piece tweaks", is needed, said The Economist, and "would focus the conversation on the overall tax system".
Of course, "some grumbling would be inevitable" and there would be almost certainly be "headlines about 'coffin taxes' and 'zoo levies'". But tax increases could be offset "by a cut to the standard 20% rate of VAT and by more generous benefits for the poorest" in order to "clean up" the tax system.
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