No, VAT isn’t a tariff – here’s what Trump (and others) get wrong
Today's episode of Untaxing is about Jaffa cakes and VAT. Tell your friends - we’ll only get renewed if absolutely everybody with the slightest interest in tax turns their radio onto BBC Radio 4 at 1.45pm.
But it’s a little embarrassing. With the benefit of hindsight, Jaffa Cakes are a very small VAT issue on a day when VAT has become a very large geopolitical issue.
Donald Trump is considering applying tariffs to much of the world because of VAT. He believes it's a tariff. You’ll be unsurprised to hear that I disagree. But the details of why he’s wrong are interesting, and go beyond “all UK buyers pay VAT so there’s no discrimination”.
So, whilst there are many good articles explaining why VAT isn't a tariff, I’ve written one with more detail, more footnotes, a socialist’s theorem from 1936, and a callback to Jaffa Cakes.
Great Programme. Subscribed! Hopefully a lot more of this to come. I’d like to see a TV show on BBC2. The insights you bring need a much bigger audience. Well informed people can have adult discussion about tax and spending, rather than the propaganda peddled by the partisans.
I seem to remember that when the question of VAT on Jaffa Cakes was being argued, the factors were, was it a biscuit and therefore liable to VAT or was it cake and therefore not.
It boiled down to how Jaffa Cakes behave when stale - biscuits become soft and soggy and cake becomes hard.
I think Jaffa won if memory serves me well.