UK’s Liz Truss eyes 5% VAT cut if she becomes PM -Telegraph

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LONDON — British leadership favorite Liz Truss plans to cut value added tax (VAT) across the board by 5% if she becomes prime minister, to tackle the cost of living crisis, the Telegraph.

Truss’s leadership campaign sees the plan as a ‘nuclear’ option, the Telegraph quoted an unnamed source as saying, with other options including a 2.5% cut in VAT, from the current standard rate by 20%.

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A 5% cut in VAT would save the average household more than 1,300 pounds ($1,527) a year and cost taxpayers 3.2 billion pounds a month, according to analysis by think tank Institute for Fiscal Studies, said the Telegraph.

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Separately, the Times newspaper reported that Truss is also considering an emergency income tax and VAT cut. Some of his allies believe that the personal abatement, the rate above which people start paying income tax, should be lifted, according to the newspaper.

The UK government is facing growing calls to provide immediate financial support to households, with energy bills set to jump 80% to an average of £3,549 a year from October.

Soaring energy bills, exacerbated by Russia’s invasion of Ukraine, pushed UK inflation to its highest level in 40 years, but the government’s response has been hampered by the race to replace Johnson which runs until September 5.

The government has said it is preparing options on a cost-of-living support package which the next prime minister should consider.

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Truss’s campaign is also considering extending a 5p reduction in fuel duty, the Telegraph said.

« Liz will be considering options to help people, but it wouldn’t be right for her to announce her plans before she’s even been elected prime minister or seen all the facts, » a Truss campaign source said.

Truss said she favors tax cuts to grow the economy. His leadership candidate and former finance minister Rishi Sunak has pledged more direct support to help households struggling with rising energy bills.

« Next month – whoever comes after me – the government will announce another huge package of financial support, » Johnson said, writing in an article for the Mail on Sunday. ($1 = 0.8513 pounds) (Reporting by Sachin Ravikumar; Editing by Richard Chang and Daniel Wallis)