As a parliamentary bid by a group of rebel MP’s to get the ‘pasty tax’ scrapped fails, fears have been raised that the tax could cost the county £30million.

The fears that pasty tax could see a £30 million drop in turnover for the industry and a large number of jobs lost were contained in a briefing from the Truro office of the accountancy practice Francis Clark in advance of the vote.

The briefing by John Endacott, a tax partner at the firm states: “Of those people who buy hot pasties and sausage rolls regularly “some 32 per cent said they would simply stop buying the dish altogether” if the price was to increase by 20 per cent.

“Given that one of the findings of the recent “A review of the of Cornwall’s Agri-Food Industry” was that food producers were facing a squeeze on margins and felt unable to pass on rising costs to the consumer; there would seem little capacity to absorb the VAT increase by dropping the net price.

“Even if one assumes that this survey exaggerates the impact on pasty sales and the impact is a 20 per cent fall in sales as predicted by retailers of Cornish pasties, then this would give a £30m reduction in turnover of (40) Cornish Pasty Association members, a £7.5m reduction in pasty industry’s spend within the local economy and 400 job losses for staff directly employed in pasty production.

“The economic impact is likely to be significantly greater than that depicted by the above due to the interrelationships between the farming community and the pasty producer because of the emphasis on local sourcing.”

The government defeated an attempt to amend the section of the Finance Bill that would have excluded VAT from freshly baked products where they have not been kept warm.

The MP’s rebelled after the pasty tax led to a chorus of disapproval, saying tax hikes will threaten jobs and increase prices for pasty lovers by 20 per cent.

All six Cornish MPs backed the amendment but the vote was lost by a 35 votes.

The government says the VAT hike is designed to end existing tax anomalies on hot food and Downing Street has defended the budget saying it was "a fair Budget and the government sticks by it".