In a significant development, the Sunday Times reported, British finance minister in the upcoming budget in March, Rishi Sunak is likely to raise taxes on businesses to pay for the Government’s COVID-19 support schemes.
During his March 3, 2020 speech, Sunak had said, he will announce a hike in corporate tax from 19 pence to 23 pence by the time of the next general election, in a move aimed at recouping $16.8 billion (12 billion pounds) a year.
According to the report, around 1 pence is set to be added to the bill for business from this autumn, and will continue to rise to the above mentioned threshold in the following years at a cost to business of 3 billion pounds.
Sunak’s allies have clarified that corporate taxes would not be raised more than 23%.
The additional tax will help in paying for an extension to a furlough scheme, business support loans and VAT cuts until at least August this year.
Unlike the previous 2010 government, which had resorted to a spending cuts to balance its books after the 2007-2009 global financial crisis, Sunak is likely to defer most of the tougher decisions regarding how to pay for that support in his budget speech.
“The corporation tax hike will be higher than expected and the extension of the support schemes will be longer than most people expect,” said the report from the newspaper citing a source.
According to sources familiar with the discussions at hand, stamp duty exemption on property purchases is also likely to be extended along with the coronavirus support schemes.
The Bank of England has predicted that the British economy is on its way to shrink by 4% during the first three months of 2021; it has already slumped to its 300 year low in 2020.
($1 = 0.7136 pounds)