The Treasury has been urged to hand back a £327million VAT Scottish windfall when energy prices rocket this year.
Energy Action Scotland (EAS) has said UK authorities are set to make a fortune when gas and electricity prices go up at end of this month.
The average household bill is also expected to rise in October, and that could see each of Scotland’s estimated 2.32million homes hand over £141 every year as VAT to the UK Government in power bills.
The charity also said that the following year tax contributions were predicted to rise to £160 for every home – up from just £52 in 2019.
Last week, Scottish Government minister Kate Forbes urged Chancellor Rishi Sunak to cut VAT on power bills ahead of his spring budget this Wednesday.
Energy Action Scotland’s Frazer Scott said VAT, which makes up five per cent of energy bills, should be scrapped as many are plunged into fuel poverty.
He warned: “Duel full bills could soon be at £3000 per year from around £1200 and that includes an eye-watering increase in VAT going straight to the Treasury.
“That is a conservative increase for Scotland. Our average price isn’t necessarily the UK average, as Scots pays more.
“We have a colder climate and a poorer standard of housing for keeping homes warm.
“We want VAT to be scrapped on fuel bills forever.”
The cost of production for fuel hasn’t increased, but a speculation frenzy has seen prices soar as cost of living kicks in.
Wholesale gas prices have gone up in three successive price rises – which have been modest until now.
EAS estimates around 25 per cent of fuel bills have traditionally been made up of Government taxes and levies.
But these fixed costs are set to become a smaller percentage as the overall price soars.
Green levies include paying for charge points being put in by the Government for electric cars.
Campaigners want these levies to be moved from fuel bills into general taxation covered by wages.
Scott added: “Things like paying for charge points is perverse in fuel bills.
"Many, many low income families are never going to enjoy electric cars or use the charge points so why make them pay for it? Fuel is an essential and we should not pay VAT on it.”
Liberal Democrat economy spokesman Willie Rennie said: “The Tories need to do more now to protect people from rising bills and no option should be off the table.
"If they fail to act we risk seeing more people falling into fuel poverty.
“Lib Dems are also calling for a long-term UK-wide home insulation programme to cut bills and make homes warmer.”
Labour’s Shadow Scottish Secretary Ian Murray said: “We urgently need to suspend VAT on energy bills, but that is not enough – the Chancellor must see sense and back Labour’s plans before this growing crisis does any more damage.”
A Scottish Government spokesperson said: “Powers relating to the energy markets remain reserved and Scottish Ministers have repeatedly called for the UK Government to urgently take further action to support households – including a reduction in VAT and targeted support for those on low incomes.”
A spokesman for the UK Treasury said it could not speculate ahead of the Budget.
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