Government urged to axe VAT on energy bills

Brits are urging the government to help consumers by axing the VAT on household energy bills, research has revealed.

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Research by uSwitch has revealed that the overwhelming majority of people would back plans for a complete axing of VAT on energy bills.

It was found that a whopping 98% of consumers were in favour of a zero-rate for energy bills.

More than 80% of respondents argued that energy is as essential as water, and so should be treated the same when it comes to VAT.

ìGiven the current squeeze on family finances, many will be astonished that our right to zero-rate VAT on household energy bills was signed away in the Budget of 1993,î said Ann Robinson, Director of Consumer Policy at uSwitch.

ìThis short-sighted move smacks of having given the family silver away and will be small comfort to those left struggling with high energy bills today.î

The move would take 250,000 homes out of fuel poverty, saving people almost £100 per year. But plans to introduce a zero-rate VAT would inevitably have problems with the EU.

Under EU arrangements, the UK can retain zero-rates that were in place on 1st January 1991, but cannot introduce new ones or extend existing ones.

ìWhile the call to axe VAT on household energy bills has hit a chord with consumers, it looks to have hit a rock with the EU,î added Ms Robinson.

ìIf the Government wants to give householders respite from the high cost of energy it will have a battle on its hands and his will be a blow to those who would have seen real benefit from the speedy removal of VAT.î

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