Why Don’t the Tories Propose to Cut VAT on Energy Products?
Guido doesn’t understand why the Tories don’t propose an alternative to taxing energy suppliers, since the cost of a “Windfall” tax would inevitably be passed on to consumers and the money only end up in a Treasury black hole once it got into the Whitehall bureaucracy.
Why not instead advocate the removal of VAT on energy bills and energy saving goods, insulation and devices? A green tax cut on eco-products would please the Zac Goldsmith wing of the Tories, a tax cut would please the voters.
Of course the E.U. would rule such a VAT cut out of order on tax harmonisation grounds, Cameron could take the opportunity to demonstrate his moderate euro-scepticism and argue that this is something that really should be decided by the British government and voters, not the European Commission’s tax commissars. It would demonstrate in a practical populist and easy to understand way how the E.U. costs British consumers. The government would be forced on to the back foot, defending E.U. enforced taxation levels. The LibDems are led by a fanatical europhile, so despite Clegg’s new found zeal for tax cutting, he would not support this progressive tax cut. It is a win-win.