It was claimed that Rishi Sunak could cut VAT on household energy bills in the Budget to reduce the cost of the living crisis.
The Chancellor is thought to be contemplating decreasing the 5 per cent rate even though he’s very little room for manoeuvre in the financial package on October 27.
As well as removing some pressure on struggling families, the move could enable Boris Johnson to hail a Brexit benefit, as VAT rates are set centrally within the EU.
With speculation beginning to mount in the run-up to the Budget, Rishi Sunak is also said to be keen to push ahead with an online sales tax after shelving plans for an overhaul of business rates.
Energy bills have been rising after wholesale prices for natural gas spiked, forcing a slew of smaller suppliers to collapse.
The government’s cap on prices for households has already increased and is set for another eye-watering increase in April.
Tory MPs have been urging Rishi Sunak to act on the burden, which comes alongside a variety of other inflationary stresses, with warnings many people will face choosing between eating and heating this winter.
During the Brexit referendum campaign in 2016 Vote Leave promised that fuel bills would be cheaper for everyone, pointing out that EU rules meant VAT on domestic energy had to be at least 5 per cent.
Government officials briefed on the Budget preparations told a newspaper outlet that decreasing the level was on the board but no definitive decisions had been taken.
One Treasury official said that it would tick two boxes, and it would remind people of the benefits of Brexit and show that they’re listening to people.
However, Rishi Sunak has been adamant that the government must rein in spending and the move would cost the Exchequer about £1.5 billion a year.
It would also be politically difficult ahead of the COP26 summit, where Boris Johnson is urging world leaders to up the pace towards Net-Zero.
Paul Johnson, director of the respected Institute for Fiscal Studies think tank, said reducing VAT would raise the effective subsidy they provide for burning gas.
He added that it would also cost over £1.5 billion a year, with most of the benefit increasing to higher-income households.
Meanwhile, a newspaper outlet said Treasury officials have intensified work on a new online sales tax intended to help level the playing field between firms like Amazon and high street retailers.
Society is all back to front because people are working five or six days a week, just to survive, while the minority live like kings and queens, and the reality is, nothing can be done without money, and they’re still printing one and a half billion a day, yet we still appear to have a serious problem.
That’s you and me and ninety per cent of the country, the other ten per cent, which is about five million people are mostly tax avoiders and this doesn’t affect them.
We need to upskill our children because good skills means more money, it’s pretty simple really and education is the solution to good salaries.
A few years ago business owners were doing moderately well, along with their nice vehicles and over fifty thousand a year salary, but in the last few years, they’ve been hammered in every way with taxes and red tape.
Rishi Sunak wants more of your money, of course, he does, and he intends for it to be built back better by billionaires.