The scheme would cost the state approximately £30b with the vouchers valid for sectors including hospitality, face-to-face retail and domestic tourism.
Drawn up by the Resolution Foundation thinktank, the proposed scheme is comparable to initiatives in China and Malta.
The foundation says the giveaway would boost demand, helping both businesses and workers.
The US has also sent out stimulus cheques of up to $1,200 in response to the Coronavirus but citizens had no restrictions on what they did with the cash.
The Chancellor Rishi Sunak is now considering the proposal ahead of his financial statement on Wednesday (8 July).
Last month is it was reported that Sunak was considering a cut to VAT in a bid to jumpstart the UK economy following the Coronavirus lockdown.
According to The Times, the Chancellor has ordered officials in the Treasury and HMRC to prepare options to reduce the sales tax, including a cut in the headline rate, and zero rating more products for a fixed period.
In private briefings last month, Treasury officials pointed out that Sunak could lower VAT and business rates at the stroke of a pen when he makes a planned speech on the economy in early July.
There is a precedent for cutting VAT in a crisis. Alistair Darling, the then Labour chancellor, reduced it from 17.5% to 15% for 13 months after the 2008 crash. It was subsequently increased from 17.5% to 20% under Chancellor George Osborne in January 2011.
The Times reports that other proposals being worked up inside the Treasury include extending, for three months, a scheme under which businesses can defer VAT payments until 2021; cutting employer’s national insurance to encourage bosses to hold on to staff; introducing an employer’s national insurance holiday for new staff to encourage recruitment; and extending business rate relief.