UK(CU)_ The VAT (Value Added Tax) is another financial issue taking center stage as Britain political battle between Liz Truss and Rishi Sunak for the role of next prime minister comes closer and closer to the final stages. Across the world and most parts of the commonwealth, governments are facing an extremely frustrated general population as they struggle to survive with the basic essentials. The pandemic saw and increased financial strain across most sectors, but small enterprises were the hardest hit with many shutting down and many others facing bankruptcy.
Britain’s debt, together with rising inflation, rising energy prices are likely to continue to put a financial strain on British households, a pressing issue which the next prime minister will need to tackle from day 1. Sunak and Truss have recently clashed over VAT where Truss is said to be considering cutting VAT and Sunak has dismissed as a move that will cost billions and hardly have any impact on struggling British households. Prior clashes between Sunak and Truss had had similar rhetoric where Sunak had stated that he would rather lose the race for prime minister rather than win on unrealistic promises.
The VAT was initiated back in the 70s as a tax that replaced the purchase tax and usually charged on goods or services classified as luxury. Over the years the charges of the VAT percentage rates have steadily decreased. The VAT usually applies when the taxable income exceeding £85,000 in 12 months. It can also apply to certain imported goods and online market places dealing with imported items.
Sunak and Truss have previously clashed over the windfall tax which is usually a one-off tax levied on corporations benefitting from an environment they are not responsible for. Sunak had put forward a windfall tax on energy corporations and Liz Truss has hinted that she may withdraw it.
