Tom Clougherty at the Centre for Policy Studies said he anticipates more calls from Conservative MPs for action into the autumn as the cost of living crisis intensifies. The Bank of England expects inflation to rise from 9pc in April to a peak of 10pc or more in October when energy prices rise again.
Mr Clougherty said there is “a lot of enthusiasm” on the Tory benches for “taking VAT off domestic fuel. That can be seen as a Brexit win”.
The headline rate of VAT could also be on the table. “It is very much the Treasury mindset — there is a recession, why don’t we cut VAT for a while to encourage people to spend?” he said.
“It would make sense from that point of view, and it would also make sense as if you reduce a sales tax as customers experience it, things might get a little bit cheaper if the savings are passed on.”
Bringing forward the 1p cut to the basic rate of income tax currently pencilled in for 2024 could also be an option, which is politically appealing as a boost to pay packets may be more noticeable than a cut to VAT which could easily be swallowed up in the general rise in prices.
Read more in The Telegraph here.
Date Added: Monday 6th June 2022
