Michael Gove says he wants to replace VAT after Brexit if he becomes PM.
The Tory leadership candidate says the UK could replace it with a "lower, simpler sales tax" once we have left the EU.
He put forward his radical plan in the Sunday Telegraph as he continued to grapple with the fallout from revelations about his cocaine use as a young journalist.
The Environment Secretary told the newspaper he wanted to introduce a pro-business economic plan.
"My economic plan is driven by the need to increase investment, productivity and wages across the country, with a special focus on helping those areas and regions where productivity is lower," he wrote.
"It would mean reducing the regulations which hold business back, cutting and reforming taxes - such as business rates - which put pressure on small businesses and undermine our high streets, using the opportunity of life outside the EU to look to replace VAT with a lower, simpler, sales tax," he added.
VAT is required as part of being a member of the European single market.
The leadership hopeful included a pledge to cut business rates and halt construction on the controversial High Speed Rail 2 project in his business plan.
Mr Gove is one of 11 candidates vying to replace Theresa May.
He was trying to shift attention from discussion of drug use for which he has apologised.
Leader of the Liberal Democrats Vince Cable said: "Michael Gove is clearly on par with other candidates in the Tory leadership race who have put forward equally ludicrous proposals. Any remaining claims the Conservatives had for having some fiscal responsibility has gone down the drain.
"VAT is an essential part of our tax system which raises vast amounts of revenue. Due to the zero rate exemption low income families are protected from the worst effects of the consumption tax.
"There is a strong argument for raising the threshold due to the bureaucracy it creates for small businesses, but this is a very different matter from scrapping it entirely."
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