A study has called for the abolition of zero and reduced rates of VAT in the UK and has urged the reprioritisation of revenues raised as a result to be used to help the poor.
According to the study by the Institute for Fiscal Studies (IFS), which is part of the Mirrlees review, a move to a single VAT rate would result in the reduction of administration costs.
This, the study argues, would raise some £23 billion for the government, in addition to having an upward impact on inflation, reports Reuters.
Extra revenue raised from such a move could be invested in means-tested benefits, it says, thereby improving the lives of the poorest three-tenths of the population.
Robert Chote, director of the IFS, said: "The main obstacle to such a reform appears to be a lack of political leadership, which is perhaps understandable when the public focuses on individual elements of the tax system rather than on the whole."
The Mirrlees review is chaired by Nobel prize-winner Sir James Mirrlees and is aimed at re-evaluating the UK tax system.
Scrap zero VAT, study says
The FSA does not regulate tax advice. Tax rules are subject to change.
