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Tue, 29 September 2020

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Rishi Sunak 'planning major tax hikes' to pay for coronavirus recovery

Rishi Sunak 'planning major tax hikes' to pay for coronavirus recovery

The Chancellor is reportedly mulling tax hikes to help balance the books

3 min read

Rishi Sunak is reportedly looking to boost taxes in an effort to pay for the UK’s coronavirus recovery.

The Treasury is drawing up fresh plans to raise at least £20bn a year to help cover the cost of massive public spending triggered by the pandemic, the Sunday Telegraph has reported.

According to the paper, Mr Sunak is considering a range of new measures to collect the cash, including cutting pension tax relief, raising fuel duty, bringing in a new online sales tax and simplifying the inheritance tax system.

The Chancellor had already hinted that taxes could rise in an effort to get help pay back some of the £150bn of government borrowing used to fund emergency Covid measures.

Speaking earlier this month, Mr Sunak admitted there would be “difficult decisions” to be taken over the economy.

“Over the medium term, we must – and we will – get our finances back on a sustainable footing to avoid debt soaring and we need to be honest with people that this will require difficult decisions,” he said.

Mr Sunak is also reportedly considering hiking capital gains tax and corporation tax as soon as this year’s budget.

The Sunday Times reports that officials want to boost corporation tax from 19% to 24%, a move which could raise as much as £12bn next year and £17bn in 2023/24.

Further cash could also be stripped out from the UK’s aid budget, which has already seen £2.9bn cut from its £15.8bn total as a result of the pandemic.

There are also reports Mr Sunak would like to "tear up" the triple-lock on pensions, which former Cabinet Office minister Damian Green said the Treasury should be "wary" of.

"It was a manifesto commitment to keep it," Theresa May's former de facto deputy told Times Radio on Sunday.

"I think this raft of things...feels like a standard pre-Budget, Treasury kite flying to see what people will make of this. Clearly the Chancellor faces some unpalatable options because he's rightly spent many many billions of pounds supporting the economy and individual workers over the past few months."

Asked if he believed it would be wrong to U-turn on the triple lock committment, Mr Green added: "I wouldn't do it. The other one on that list that I particularly wince at is the thought of breaking the commitment on foreign aid.

"I'm proud of the fact that Britain is one of the few countries that meets its commitment to have a small part, 0.7% of our GDP, spent on foreign aid and I would certainly want to see that continued."

The Treasury blueprint is set to put Mr Sunak on a collision course with Number 10, who are reportedly strongly opposed to the plans and would instead want to see cuts to Whitehall spending to balance the books.

But a source close to the Treasury said: “The political reality is that the only place you get the money is from the better-off.

“Polling has shown this was ‘popular’.”

 

 

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