VAT accounts for 86 per cent of HMRC tax intake

Figures revealed by the Taxpayers Alliance (TPA), stated that HM Revenue & Customs (HMRC) took almost £6 billion in tax over Christmas, of which a massive £5.2 billion was in VAT.

According to the research, alcohol duty will have accounted for £301 million and fuel duty £243 million, meaning that every household in the UK would have paid on average £211 each over the festive period.

With the UK tax burden at historically high levels, former ministers are demanding a Brexit bonus of slashing or scrapping VAT. However, under EU rules, VAT cannot be reduced below 15 per cent.

The UK’s current VAT level is 20 per cent, but the European Union has thwarted attempts to scrap it altogether or axe it on items such as domestic fuel and tampons. However, depending on the Brexit deal struck, when the transition period ends in 2020, the Chancellor will be free to halve the rate or abolish it altogether.

According to Professor Patrick Minford, Chairman of Economists for Free Trade, reducing VAT could boost the economy. He argues that taxes drive up the cost of living, so free trade counteracts this by cutting the prices of what is purchased from abroad.

In his opinion, leaving the European Union and striking free trade deals around the world would lower the cost of living by eight per cent.

The professor’s words were echoed by former education secretary Nicky Morgan, who suggests that VAT should be scrapped and by former Minister, Sir John Redwood, who says the UK is “over-taxed”.

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