A cut in VAT has been proposed by No 10 to curb inflation and help households with the cost of living crisis.
Steve Barclay, the prime minister’s chief of staff, suggested reducing the 20 per cent headline rate of the tax, The Times has been told.
He proposed that a temporary cut would reduce the tax bill for millions and ease inflation, which is at 9.1 per cent — the highest for 40 years.
However, the Treasury is concerned about the cost of the move and has warned that it could ultimately fuel inflation by overstimulating the economy. It has also raised the point that it would benefit wealthy households as well as poorer ones.
Cutting VAT to 17.5 per cent would cost the government
