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Rishi Sunak, a leadership candidate, proposes energy bill tax cuts

Rishi Sunak, a leadership candidate, proposes energy bill tax cuts

Rishi Sunak, a leadership candidate, proposes energy bill tax cuts

British PM candidate Sunak vows 20% income tax cut by 2029 (credits:google)

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  • Rishi Sunak is a candidate for Britain’s next prime minister.
  • He has proposed eliminating taxes on household energy bills as part of a “winter plan” to alleviate the cost-of-living crisis.
  • Some experts cautioned that the policies would benefit the wealthy more than the poor.
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Rishi Sunak, a candidate for Britain’s next prime minister, proposed on Wednesday to temporarily eliminate taxes on household energy bills as part of a “winter plan” to alleviate the country’s cost-of-living crisis.

“The year-long hiatus on paying value-added tax (VAT) on energy bills would save the average household 160 pounds ($193)”, former finance minister Sunak said.

Sunak’s pledge represents a shift in strategy for him, who has previously emphasised the importance of restoring fiscal discipline to the United Kingdom. Some experts cautioned that the policies would benefit the wealthy more than the poor.

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Sunak had ruled against decreasing VAT on electricity costs three months ago as finance minister since it would not benefit families significantly. His team described it as the “centrepiece” of his winter strategy.

“This temporary and targeted tax cut will get people the support they need whilst also – critically – bearing down on price pressures,” Sunak said.

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Sunak’s departure from the government earlier this month aided the mutiny that resulted in Prime Minister Boris Johnson agreeing to retire following a series of scandals. Members of the ruling Conservative Party will vote on a replacement throughout the summer, with an announcement expected on September 5.

Foreign Secretary Liz Truss, the bookies’ favourite to succeed Johnson, has proposed a broader range of tax cuts, which Sunak has called foolish.

Truss, who had a 24-point advantage over Sunak among Conservative Party members last week, has frequently warned that Sunak’s ideas will push the country into recession.

Whoever wins the election will inherit some of the most difficult situations in Britain in decades. Inflation is on track to reach 11% per year, growth is slowing, and industrial action is on the rise.

According to the Institute for Fiscal Studies, lowering VAT on energy bills would be “small beer” in comparison to the impending spike in energy rates.

In October, the power industry regulator Ofgem is expected to raise the price cap for bills based on normal household energy usage by more than 150 percent, to more than 3,000 pounds per year, up from 1,971 pounds now.

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By providing more support to those who use more energy, a VAT cut “would be well targeted at those who face the biggest rise in their energy bills, but not at those – the poorest – who are least able to cope with the rise in costs,” said Stuart Adam, senior economist at the IFS.

“I don’t think it’ll work particularly well for Rishi Sunak. I think he has created a rod for his own back here,” Curtis told.

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