Welsh Lib Dems demand emergency VAT cut to help families with cost-of-living crisis
The Welsh Liberal Democrats have demanded an emergency cut to VAT as inflation looks set to reach the highest rate in decades, compounding the cost-of-living crisis.
To protect families from soaring bills the party has proposed reducing the standard rate of VAT from 20% to 17.5% for one year, a move that would put an average of £600 back into the pockets of Welsh families.
They are also calling for the Conservatives’ National Insurance tax hike to be scrapped to offer much-needed respite to millions of families.
The proposals come amid warnings that energy, food, and fuel bills are all expected to rise further due to the war in Ukraine, increasing financial pressures on Welsh households.
According to the Lib Dems, cutting VAT could be rapidly introduced by the Chancellor for one year without the need for new primary legislation and say he should use the Spring Statement on March 23 to bring forward the change.
They argue the move would help the retail industry, giving a much-needed boost to local high streets and increasing economic growth as well as limiting inflation, which is forecast to increase to 8% in April.
A similar VAT cut in 2008 was found to boost retail sales by about 1%, increasing expenditure by around 0.4% while the change meant inflation fell from 4.1% to 3.1%.
Leader of the Welsh Liberal Democrats, Jane Dodds said: “Now is the time for action from the Conservatives and Rishi Sunak. Their cost-of-living crisis is hitting families hard, and it is about to get worse. Will Sunak act or will he let families up and down the country suffer more financial pain?
“An emergency cut to VAT is desperately needed for the hundreds of thousands of Welsh people worried about making ends meet.
“High street businesses that fear going to the wall would receive critical support, as people who are feeling the pinch spend more at their local shops, cafes, and restaurants.
“This is a once-in-a-generation crisis, and the government must step up to help struggling households and businesses on the brink.
“Instead of clobbering struggling families with a tax hike, the Chancellor should be putting money back into their pockets.”
An opinion poll last week revealed that 71% of people feel their personal financial situation is set to get worse over the next 12 months and 27% said they’ll struggle to pay their next energy bill.
This follows changes to the energy price cap from energy regulator Ofgem that takes effect from the 1st of April and will mean increased bills for 22 million households.
The poll under its new name Barn Cymru was conducted by YouGov for ITV Cymru Wales and Cardiff University’s Wales Governance Centre, showed that 90% of respondents have seen an increase in the weekly shop.
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