It seems the European Court of Justice (ECJ) is going to have to rule on the great case of whether the Marks & Spencer chocolate teacake is in fact a cake or a biscuit. HM Customs & Excise say it's a chocolate-covered biscuit, in which case M&S owes them £3.5m in Value Added Tax (VAT). M&S say don't be daft, it's a cake, which makes it zero-rated.

This stupendous waste of public money and time arises out of the sheer stupidity of the VAT laws. VAT in Britain puts a whopping 17.5% on the cost of what you buy, so in order to show how much they care about deserving groups, the politicians exempted some items such as food, domestic (and, for some reason, aviation) fuel, and children's clothing. Later the tax was extended to hot take-away food, so if you buy a hamburger and salad, I guess one has VAT on and the other doesn't.

I'm certainly confused, like M&S and the Excise. But I suppose the origin of this dispute is that chocolate biscuits are considered a luxury and are taxed, while chocolate cakes are considered food and are exempt. We have seen the same disputes over Jaffa Cakes and gingerbread men.

Such things are the hallmark of a bad tax. We used to have just the same absurdities with the old Purchase Tax, which had various rates. So a dish with indentations to put your cigarette on was classed as an ash tray and taxed as a luxury, while the identical dish with a flat rim was classed as a peanut bowl, which being a food container attracted less tax. Not surprisingly, pub ashtrays became universally flat-rimmed, and you still see many of them around today.

It's surely a principle of taxation that it should apply evenly rather than haphazardly. If you're going to have VAT (and it's a very bad, complicated, and costly tax we could well do without), you should apply it to everything and cut the rate. If that means needy people can't then afford clothes for their children, then deal with that problem separately. But don't complicate a tax so much that you have to go right up to the ECJ to define a teacake.