Britain should abolish zero and reduced rates of VAT and use the revenue raised more directly to help the poor, a study commissioned by the Institute for Fiscal Studies says.

Moving to a single rate of VAT would cut administration costs and raise around 23 billion pounds for government coffers, the study argues.

If 12 billion pounds of this extra revenue were used to raise means-tested benefits, it would leave the poorest three-tenths of the population better off on average while still leaving 11 billion to cut taxes or spend in other ways, the study calculates.

The parlous state of Britain's public finances means Chancellor of the Exchequer Alistair Darling may be more open than usual to tax-raising suggestions, but scrapping the zero rate on items such as food and children's clothes may be politically unpopular.

It would also have an upward impact on inflation, which is already running well above target.

The study for the Mirrlees review, chaired by Nobel prize-winner Sir James Mirrlees, notes that the impact on inflation would be temporary and most losers could be more than compensated by the extra revenue raised.

"The only barrier is the reluctance of politicians to be seen to propose taxing essential items," it says.

Britain's standard rate of VAT stands at 17.5 percent, which is around average among industrialised nations. However, Britain applies zero and reduced rates more extensively than most other countries.

Basic foodstuffs, children's clothing and residential housing are all zero-rated. A 5 percent rate applies to domestic energy and items such as contraceptives, children's car seats and many energy saving products.

Robert Chote, director of the IFS, said the study made a powerful case for moving to a uniform rate of VAT.

"The main obstacle to such a reform appears to be a lack of political leadership, which is perhaps understandable when the public focus on individual elements of the tax system rather than on the whole," he said.