The Chancellor has been accused of making millions from taxpayers through a double taxation on energy bills, according to a report released today by the National Energy Action (NEA) charity.
The NEA say that charging VAT on top of ‘green’ taxes, such as carbon levies, is unfair to consumers and potentially causing fuel poverty.
Peter Smith, author of the NEA report, told The Telegraph:
“Household energy prices are already soaring and the Treasury should not contribute to this or directly benefit from the proceeds. Instead, this money should be spent on helping to end the misery and suffering caused by fuel poverty in Britain’s cold homes.”
The tax also puts pressure on small businesses, which continue to struggle against rising operating costs.
HM Treasury reportedly made £27m in VAT in carbon levies alone in 2013, which is predicted to rise to £113m by 2020 unless taxes are frozen.
However, the Department of Energy calculates that £50 will be added to bills by 2020, and the Treasury insist that the carbon tax is aimed at suppliers rather than consumers.
VAT on energy is currently charged at 5%, which is the lowest it can possibly be under EU law.