Calls have been made for chancellor of the exchequer Alistair Darling to re-think pre-Budget report proposals.
Liberal Democrat deputy leader Vince Clegg stated that a cut in value added tax (VAT) will do little to help those trying to become debt free, as there are already discounts being offered in shops.
“Instead, the chancellor should be putting money directly back in people’s pockets with a big permanent cut in income tax,” he added.
The pre-Budget report revealed that VAT would be reduced from 17.5 per cent to 15 per cent, but Mr Cable argued that the basic rate of income tax should be addressed – in order to help low earners and those most at risk of bankruptcy.
He explained that this would be paid for by closing loopholes for the very wealthy.
This week personal finance site Fool.co.uk noted that a VAT cut would help consumers by gradually easing the pressure on household finances.
By Andy Mackay