Under the current tax law, consumers do not pay VAT on foods that are classified as essential, including milkshakes, frozen pizzas and chips. Items such as smoothies and pure fruit juices, which are classified as 'luxury' goods, are subject to a 17.5% VAT charge.
Asda's marketing operations director, Sally Hopson, said the current tax system was nonsensical and encouraged people to buy cakes and frozen pizzas. She called for a common-sense approach to pricing and the removal of the premium for making healthier choices.
An e-petition signed by Asda chief executive Andy Bond has been posted on the Downing Street website. Over the coming weeks, the retailer plans to lobby MPs, health and nutrition workers and organisations, stakeholder groups, Asda employees and consumers to support its campaign. It is hoping for a response in the pre-Budget report later this year.
According to Asda, the Treasury brings in £200m a year from VAT on fruit juices and smoothies.
The government has tried to promote healthy eating and spread the '5 a day' message in recent years. Asda says that a reduction in VAT will encourage consumers to eat more fruit and vegetables and support the government's recent 'Health weight, healthy lives' paper, which prompted the launch of a £75m marketing programme to help parents improve their children's diets.
Asda has a history of campaigning for VAT changes and in 1997 launched a campaign to cut the 17.5% tax on sanitary towels and tampons. Gordon Brown cut VAT on these products from 17.5% to 5% in his 2000 Budget.
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