United Kingdom

Treasury says it has 'no plans' to lower VAT on energy bills

The Treasury has said it has 'no plans' to lower VAT on energy bills, despite promises to scrap the tax after Brexit. 

Boris Johnson and Michael Gove pledged to scrap the duty during the EU referendum campaign. They said the Government was barred from lowering the tax because of EU rules. 

Writing in The Sun in 2016, Johnson said: 'Fuel bills will be lower for everyone. As long as we are in the EU, we are not allowed to cut this tax.

Promises: Boris Johnson and Michael Gove pledged to scrap the duty during the EU referendum campaign

'When we vote Leave, we will be able to scrap this unfair and damaging tax. It isn't right that unelected bureaucrats in Brussels impose taxes on the poorest and elected British politicians can do nothing.' 

But the Treasury has pushed back on more recent calls to cut the duty. MPs have suggested cutting VAT on a raft of items after Rishi Sunak cut the 'tampon tax' on sanitary products on January 1. Domestic energy bills have been subject to 5 per cent VAT since 1993. 

Conservative MP Stephen McPartland said: 'VAT is a tax on products that people choose to buy, rather than things they require, like household energy. It makes sense for domestic energy to be VAT-free, and it will help with the cost of living now that so many people are working from home.' 

Jesse Norman, Financial Secretary to the Treasury, said: 'Although the Government keeps all taxes under review, there are no plans to change the current VAT treatment of domestic energy.'  

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