Rishi Sunak tax warning: Hike to heat your home could QUADRUPLEDecember 3, 2021
Surging energy and fuel costs push inflation to near-decade high
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Announcing a new report on steps post COP25, Chair of the CCC Lord Deben said the UK needed to “walk the talk” and deliver urgent actions. The committee’s latest report warns VAT on gas, which is currently at a reduced rate of five percent, could be seen as a ‘post-tax subsidy’. Increasing it to the standard 20 percent would quadruple the tax burden on household energy. The report called for the Treasury to start a review of tax policy, adding that a higher and more consistent carbon price was needed. However the idea has met with some criticism at a time when households are already dealing with soaring energy costs.
Campaign group Net Zero Watch argued that reduced rates of taxation such as on household heating were legitimate means to reduce the cost of living and therefore compassionate and humane.
They also added that subsidies to fund renewable energy were already paid out of fuel bills which the group said costs consumers £10bn a year.
Net Zero Watch director Dr Benny Peiser branded the idea of a VAT hike: “Deeply concerning for people across the country, adding insult to injury for millions of families who are already struggling to keep their homes warm this winter.”
He added: “Rishi Sunak should reject this ill-conceived plan and make every possible effort to reduce the burden of energy costs at this difficult time.”
Fuel poverty group National Energy Action (NEA) are also today warning about the impact of rising fuel prices on household finances.
According to the group, average energy bills have soared over £230 per customer compared to last winter.
They also warn of further price rises ahead, predicting bills could increase by £467 next year based on an average of industry forecasts.
NEA Chief Executive Adam Scorer said: “Every home should be a warm and safe place, but for over 4.5 million UK households the cold reality is very different and getting much worse.
“The cost of living in the UK is at its highest level in a decade with household energy bills the biggest driver.
“When the costs of essential services go up, those on lowest incomes get hit hardest.”
The CCC report looks to Government targets to upgrade efficiency for fuel poor households by 2030 as an important step and warns subsidies should be phased out in a way which “does not disadvantage them in the near term.”
A CCC spokesperson said: “When it comes to heating there are better ways to support consumers than subsidising fossil fuels, through direct financial support the vulnerable for example, or better still helping to make homes more insulated.
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“Ministers have a host of choices.”
A Government spokesperson said: “Our Net Zero Strategy, described by the Committee as a ‘strong foundation for delivery’, delivers a comprehensive set of measures to keep us on our path to net zero and on track to meet our targets along the way.”
They added tax policy continues to be kept “under review.”
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