Ms Truss and her leadership competitor, former chancellor Rishi Sunak, have faced growing calls to unveil a response before either enters No 10 early next month.a levy placed on most of the things we buy
VAT on most items is 20 per cent of their value, while some items, like home energy, are taxed at 5 per cent.What is the proposal?and, which would cost taxpayers £3.2 billion pounds a month, or £38bn a year, according to an analysis by the Institute for Fiscal Studies think tank.: “[The Treasury] have talked about the Gordon Brown approach that he took at the time , when it looked as though consumer confidence was falling.
Others in the Truss camp have suggested raising the tipping point for the higher rate of 40 per cent and cutting the basic rate below 20 per cent, it added.Modelling suggests the 5 per cent cut would save the average household more than £1,300 per year, according toThe intervention would also reduce inflation temporarily by an estimated 2 per cent, a priority after it hit a 40-year high of 10.1 per cent earlier this month.
People on low incomes, who spend a large portion of their earnings on VAT-exempt essentials, such as basic foods, will barely benefit from the cut, while wealthier households, who spend a greater proportion on luxury goods or services, will see significant savings.
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