Prime Minister Rishi Sunak considers a 5% reduction in VAT on household energy prices to help Boris Johnson provide the expected “Brexit dividend” to help his family survive the harsh winter doing.
Some Conservative lawmakers have demanded that snacks reduce their VAT rates on the October 27 budget to show that the government is responding to the impending crisis in living costs.
However, the prime minister is generally resisting the pressure to loosen the purse on a very tight budget and is wary of the political risks of reducing VAT on domestic energy prices and the annual cost of about £ 1.5 billion.
During the 2016 Brexit referendum campaign, one of Vote Leave’s promises was that “fuel costs for everyone will be cheaper.” EU regulations stipulate that Member States cannot reduce their domestic energy and gas VAT to less than the current 5%.
“When we vote for vacation, we can abolish this unfair and damaging tax,” Johnson and other Brexitters said in a joint statement. “It is incorrect for unelected bureaucrats in Brussels to impose taxes on the poorest elected politicians.”
Government officials, who were briefed on budget preparation, said snacks in favor of Brexit considered reducing VAT by 5%, but no decision was made. The Treasury declined to comment.
“It checks two boxes — it reminds people of the benefits of Brexit and shows that you’re listening to people,” said one Treasury official who participated in many budget deliberations. I did.
However, Mr. Snack has been told by his colleagues that he is concerned about the “significant precedent” that would be set if he began to reduce VAT, an essential source of income for the Treasury. The prime minister is trying to impose fiscal discipline on his budget after making huge public spending during the coronavirus crisis.
Reducing VAT on energy prior to the UN COP26 Climate Summit in Glasgow can also be controversial.
The move “increases the effective subsidies we provide for combustion gases,” said Paul Johnson, director of the Institute for Fiscal Studies, a think tank.
“It also costs more than £ 1.5 billion a year and most of the profits come to high-income households,” he added.
However, Robert Halfon, the conservative chairman of the House of Commons Board of Education, said the VAT cut “shows that he is doing something to help consumers” and respects Brexit’s referendum pledge. Stated.
He said trying to secure environmental goals “behind the working people” was wrong and was pleased that the VAT cut would target poorer households. Sir Christopher Chope, the Tory Grande, also supports the move.
Another think tank, Resolution Foundation economist Jonny Marshall, said VAT reductions would be “not targeted and very expensive,” and Sunak could use other mechanisms to help poor families during the winter. I added that I can do it.
Last month, the government launched a £ 500m fund for Congress to help underprivileged people throughout the cold season. We also help vulnerable consumers through schemes such as warm home discounts and winter fuel payments.
Snacks are considering reducing VAT on household energy bills
Source link Snacks are considering reducing VAT on household energy bills