A cut in VAT will support legitimate tradesmen and prevent an informal cash economy from flourishing.
Business secretary Vince Cable has been rapped for failing to pay a tax bill worth as much as £25,000.
George Osborne should cut VAT to stimulate the struggling UK economy, shadow chancellor Ed Balls has suggested.
Labour has lost a vote on petrol prices, after a debate calling for a cut in the level of VAT at the pump.
The tax bill on Christmas purchases for the average family will mount to £283 this year, the Taxpayers' Alliance warns.
Former chancellor Alistair Darling has admitted he was barred from raising VAT by Gordon Brown.
The controversial VAT increase has survived a vote in the Commons despite hostility from both government and opposition MPs.
The new government will have to increase VAT, leading economists have said.
Liberal Democrat leader Nick Clegg has labelled the 2.5 per cent cut in VAT as a "waste of money".
The Treasury has rejected a new report suggesting more than £8 billion in VAT was stolen by fraudsters last year.