The Observer features an IEA report
Last year the shadow chancellor, Ed Balls, said he favoured a cut in VAT because, as a tax on sales rather than income, it would be the “fastest and fairest” way to boost the economy. He was criticised for pledging to reverse the government’s 2.5% VAT rise at a cost of £12bn. However, the IEA’s new report, Aggressively Regressive: The Sin Taxes that Make the Poor Poorer, to be published on Monday, proposes cutting taxes on fuel, alcohol and tobacco by half, scrapping green-energy subsidies and reducing VAT to 15%. This, it says, would put money back in the pockets of those who need it most. The poorest households, the report finds, pay 37% of their gross income in direct and indirect taxes.
Christopher Snowdon, the author of the report, said: “It’s clear that an increase in taxes on the goods families consume is making life harder for people. This is especially true for the poorest who spend a much higher proportion of their income on high-taxed products such as alcohol and tobacco.
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