§ Mr. Malcolm BruceTo ask the Chancellor of the Exchequer if he will estimate the cost of reducing the value added tax on domestic fuel from 8 per cent. to 5 per cent. [12794]
§ Mr. Oppenheim[holding answer 27 January 1997]: The estimated cost of reducing VAT on domestic fuel and power is about £430 million in a full year. This estimate is based on the costings methodology explained in annexe A to chapter 6 of the 1997–98 "Financial Statement and Budget Report". It therefore incorporates assumptions about changes in behaviour in response to the reduced rate of VAT, but excludes any effect of the tax change on the overall level of income and spending.