The Chancellor Rishi Sunak is considering cutting VAT by 5% on energy bills as Brits are facing an expensive winter amid soaring gas prices.
The Financial Times has reported that the Chancellor could cut VAT by 5% on energy bills in his Autumn Budget on 27 October.
A Treasury official said, “It would tick two boxes, it reminds people of the benefits of Brexit and shows you’re listening to people.”
The move would mean the Treasury will miss out on £1.5bn in extra revenue through taxation and there has been calls from MPs to also slash further VAT costs for other items.
Andy Mayer, Chief Operating Officer at free market think tank the Institute of Economic Affairs told LondonLovesBusiness, “This is smart politics by the Chancellor. As the cost of living and specifically energy prices rise, all tax cuts are welcome relief for the public.
“Even more welcome would be a general review of the social and environmental charges layered on energy bills by successive governments – and their rapid reduction.
“Otherwise the benefit of this change will be entirely invisible.”