Treasury sources are describing the new pasty tax as, "nice, easy, simple."
The Conservative backbencher Nadhim Zahawi has welcomed the change in VAT on static caravans:
Good news on static caravans. Government consulted and acted. 5% tax instead of 20%. Industry lobbied MPs in a constructive way.
But Labour MPs are mocking the Government's u-turn:
A few weeks ago Labour proposed scrapping the pasty tax. Tory/Lib-Dem MPs voted to keep the tax. Now they are scrapping it. #uturn
Liberal Democrat MP for St Austell & Newquay, Stephen Gilbert, has welcomed reports of the Government u-turn on the 'pasty tax':
If confirmed, the Cornish people will have won and there will be dancing in the streets from Land’s End to the Tamar.
The strength of feeling from local people and the national baking industry has been clear since these proposals were announced. Plans to extend VAT to batch-baked goods would be unfair, unenforceable and cost jobs and investment across the country.
Since the budget, I have worked with the industry to find an alternative and it seems the Government has listened and agreed. I proposed an alternative, workable solution that would creates a level playing field with other sorts of hot food and won’t endanger jobs, investment or growth.
Cornish MP George Eustice welcomed the move on the pasty tax:
This is great news for the Cornish pasty industry and resolves all of the problems that had been raised by the industry.
The Government has run a genuine consultation and now an improved proposal as a result.
The Treasury should be given credit for the way they have approached the issue.
A spokesman for the Treasury said:
The Budget announced a consultation on a change to VAT on hot takeaway food, designed to remove inconsistency and ambiguity in the system and level the playing field across the takeaway food market.
After extensive engagement we have improved the policy, addressing practical concerns, ensuring that the new regime could be as simple as possible to apply.
We have addressed these in a way that allows us to remove the inconsistent VAT treatment, while not imposing any additional requirement on businesses to test the temperature of their products.
The Government is planning to reverse its plans to charge VAT on Cornish pasties: the controversial levy that became known as the 'pasty-tax'.
The government is said to have altered the definition of what is a "hot" pasty to allow the reversal. Under the new definition food such as sausage rolls or pasties sold on shelves, (i.e. cooling down, instead of being kept hot) will not be liable for VAT.
A bid by rebel Lib Dem and Conservative MPs to remove the Government's plans to impose VAT on takeaway pasties, better known as a "pasty tax", has been defeated by 295 votes to 260 - a majority of 35.
The hot issue consuming both main political parties today is the 'pasty-tax' announced by George Osborne in his budget.
David Cameron admitted he's a fan of pasties. And Ed Miliband - sausage rolls. So why the hot air over hot food?
Romilly Weeks on a new takeaway tax some are finding hard to swallow: