In the UK, Liz Truss is considering a 5% cut in VAT if she becomes Prime Minister

British leadership contender Liz Truss is considering cutting value added tax (VAT) by 5% to tackle the cost of living crisis if she becomes prime minister, the Telegraph newspaper reported on Saturday.

The Telegraph quoted an unnamed source as saying that Truss's leadership campaign considers this a "nuclear" option and that other options include a 2.5% cut in VAT from the current standard rate of 20%. The Telegraph cited analysis by the Institute for Fiscal Studies think tank that a 5% cut in VAT would save the average household more than 1,300 pounds ($1,527) a year and cost taxpayers 3.2 billion pounds a month. The Times newspaper also reported that Truss was considering an immediate cut in income tax and VAT. Some of his allies believe the personal allowance, the rate at which people start paying income tax, should be abolished, the paper said. The British government is facing calls to provide emergency financial support to households as energy bills are set to rise by 80% from October to an average of 3,549 pounds a year. Rising energy bills, coupled with Russia's invasion of Ukraine, have pushed inflation in the UK to its highest level in 40 years, while the race to replace Johnson as prime minister, which runs until September 5, is hampering government intervention. The government said it was preparing options for a cost of living support package for the next prime minister to consider. The Telegraph said Truss's campaign was also considering extending the 5p cut in fuel duty. "Liz will consider options to help people, but it would not be right for her to announce her plans before she is elected Prime Minister or has seen all the facts," a source in Truss's campaign said. Truss has said she favors tax cuts to grow the economy. Her rival in the leadership race, former finance minister Rishi Sunak, has promised more direct support to help households struggling with rising energy bills.   Follow Global Economic Developments on Social Media! Click here to follow Ieconomy official Facebook account! Click here to follow Ieconomy official Instagram account! Click here to follow Ieconomy official Twitter account!