Prime Minister Hopeful Truss Mulls Idea of Cutting VAT by 5%, Reports Suggest

MOSCOW (Sputnik) - UK Foreign Secretary and prime minister candidate Liz Truss is thinking about lowering the country's value added tax (VAT) by up to 5% to address the cost-of-living issues, The Telegraph reported, citing a source.

According to the newspaper, the Treasury will present the next prime minister with plans based on Gordon Brown's handling of the 2008 financial crisis, which included a temporary VAT cut of 2.5%. The Treasury's plans are said to run the gamut from a 2.5% reduction to 5%, which would be the highest cut in UK history and bring VAT down to 15% from the current 20%. This would save the average household over 1,300 pounds ($1,527) per year.

Despite Truss claiming that no decision on financial support will be made until after the Conservative leadership race is over, she is said to have discussed the measure with her top advisers and does not rule out this option.

On Friday, the UK energy regulator Ofgem announced an 80% increase in the energy price cap to 3,549 pounds ($4,194) per year starting October 1 due to rising global energy prices. Since its last revision in April, the energy price cap has stood at 1,971 pounds ($2,315). In October 2021, the price cap was 1,277 pounds ($1,500). Ofgem chief executive Jonathan Brearley warned that energy prices are likely to continue to rise, and called on the country's future prime minister to take new measures to tackle the problem.