ASDA is today launching a campaign calling for a reduction in VAT on 100% fruit juices and smoothies to bring an end to a tax which unfairly penalises people for choosing healthier options.
Under current tax law, people pay zero VAT on ‘essential’ foods and drinks such as milkshakes, frozen pizzas and chips but 17.5% on ‘luxury’ items such as smoothies and 100% fruit juices[i].
ASDA is today calling for this to be reduced to 5%, which is the minimum allowed under EU law[ii].
Sally Hopson, Marketing Operations Director for ASDA, commented:
“Current VAT law makes no sense - the Government charges the full rate of tax on healthy fruit juices and smoothies while effectively encouraging people to buy cakes and frozen pizzas by not taxing them at all.
“This is about a common sense approach to pricing: we all know that we should be eating more fruit and vegetables and we know that price often plays a big part in deciding which items to buy. So why should we pay a premium for making healthier choices?”
A petition has today gone up on the Downing Street website, with Andy Bond, CEO of ASDA, as lead signatory: http://petitions.pm.gov.uk/juicesvat/. ASDA will be contacting MPs, health and nutrition workers and organisations, stakeholder groups, ASDA colleagues and consumers asking for their support and is hoping for a response to the petition in the 2008 Pre-Budget Report.
Richard Laming, Communications Director, British Soft Drinks Association, said:
“The government rightly wants people to eat more fruit and vegetables because it would be good for their health. They could encourage this by reducing the level of VAT on fruit juice and smoothies, which count towards the 5 a day target.
"It would be better if tax policy and health policy both pointed in the same direction.”
ASDA estimates that the Treasury currently takes approximately £200m per year from charging 17.5% VAT on fruit juices and smoothies.
100% fruit juices and smoothies can deliver significant health benefits: each serving contributes towards the Government’s target of at least five fruit and vegetable portions a day and mounting evidence shows that an increase in the consumption of fruit and vegetable lowers the risk of chronic diseases such as coronary heart disease and some cancers.
Heart disease costs the UK economy £29bn a year in healthcare expenditure and lost productivity[iii].
A reduction in VAT on 100% fruit juices and smoothies would also support the Government’s recent ‘Health Weight, Healthy Lives’ paper which announced the launch of a £75m marketing programme to help parents make changes to their children’s diet and levels of physical activity.
ASDA encourages healthy eating across its product range and recent commitments to this include: becoming the first retailer to meet the Food Standard’s Agency’s 2010 salt targets for all own-brand products; becoming the first retailer to remove all artificial colours and flavours from own-brand products and becoming the first retailer to remove hydrogenated oil and aspartame from all own-brand products.
ASDA is also the only major retailer to have introduced the dual food labelling system, incorporating both GDA and traffic light labelling.
This campaign follows a series of successful common sense pricing campaigns by ASDA: In 1997, ASDA launched a campaign to stop VAT being charged on tampons and sanitary towels.
It cut the cost of its own-brand range by 17.5% and lobbied the Government and European Union ministers to get the tax reduced.
In the 2000 Budget, Gordon Brown cut tax on these products from 17.5% to 5%.
The company played a pivotal role in challenging the Net Book Price Agreement, a British price fixing agreement between publishers and booksellers which set the prices at which books were to be sold to the public, meaning that retailers were no longer forced to sell books at recommended retail prices.
In March 1997 the Restrictive Practices Court found that the Net Book Agreement was against the public interest and it was ruled illegal.
In 2001 ASDA successfully challenged the pharmaceutical industry on the Resale Price Maintenance of medicines, which gave manufacturers of over-the-counter medicines the right to set the minimum price at which drugs are sold. This practice was abolished in 2001.
