Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will make an estimate of the cost to the public purse of reducing VAT to zero on household energy bills as an annual figure.
High energy prices reduce VAT revenues. In recognition that families should not have to bear all the VAT costs they incur to meet their needs, domestic fuels such as gas and electricity are already subject to the reduced rate of 5 per cent of VAT. If people spend more on energy where VAT is 5 per cent, they spend less on goods and services that on average have a much higher VAT rate, thereby reducing VAT revenue overall.