A 5-point cut would cost the taxpayer £38 billion to keep in place for one year, the Telegraph said, citing analysis by the Institute for Fiscal Studies. It may also reduce inflation temporarily by around 2 points…reports Asian Lite News
Liz Truss is considering cutting VAT sales tax by as much as 5 percentage points across the board, the Telegraph reported, a move that may head off criticism she lacks a plan to tackle the country’s cost of living crisis.
The potential reduction to 15%, flagged in a newspaper that has strongly backed her leadership campaign against Rishi Sunak, represents something of a change of tack by Truss.
With the contest entering its final week — there’s one hustings remaining in London on Wednesday — Truss is favored to win the backing of Conservative Party members and become Britain’s prime minister.
The reduction in the value added tax headline rate would be the largest ever and may save the average household more than £1,300 ($1,527) a year, according to the Telegraph. It could protect businesses from failing and may be accompanied by additional measures to help the most vulnerable pay their energy bills, which are set to almost triple this winter from a year earlier, the newspaper said, citing officials.
“Colossal sums” have been comitted to help people pay their bills and the next government is set offer more help with another huge package of financial aid to be announced next month, outgoing Prime Minister Boris Johnson said in an article published in the Mail on Sunday.
The Treasury will also present the next prime minister with plans modeled on former Prime Minister Gordon Brown’s response to the 2008 financial crisis as part of a series of options to offset soaring energy bills, according to the Telegraph.
A 5-point cut would cost the taxpayer £38 billion to keep in place for one year, the Telegraph said, citing analysis by the Institute for Fiscal Studies. It may also reduce inflation temporarily by around 2 points.
Another suggestion being considered by Truss’s camp would be to raise the personal allowance, that allows people to earn £12,570 a year before they start paying tax, ahead of Treasury’s schedule, the Times reported.
Others in her team have proposed raising the threshold at which workers start paying the higher rate of income tax which stands at £50,270, according to the newspaper.