CHANCELLOR Rishi Sunak is set to extend furlough and the Universal Credit uplift – but painful tax hikes are on the cards too.
Insiders have described the Budget next week as a sandwich of good and bad news for families.
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Some have likened it to “two big slices of bread with very thin jam”.
The first piece is a £30billion coronavirus support bundle that will see furlough, business relief, the Universal Credit uplift and stamp duty holiday all extended until June.
The Sun has previously reported how furlough will carry on beyond its April deadline to help the millions of people still unable to work.
The Universal Credit uplift of £20 per week, amounting to £1,040 for families over the year, was also reported to be likely to remain in place while coronavirus rules remain.
Meanwhile, the Chancellor has come under pressure to extend stamp duty by families who have been left scrambling to complete their transactions before the deadline of March 31.
But this package of support, to bring those measures in line with the roadmap for coming out of lockdown, leaves “thin jam” — or little to spend elsewhere.
Slice two is a package of tax hikes to start raising billions to close the UK’s budget deficit, which will hit £400billion by April.
In a bid to prove to the world that Britain’s spending is not out of control, the Chancellor will likely announce a hike in corporation taxes — up to as much as 25% from 19% over a number of years.
Raising capital gains will target the rich, such as second-home owners.
Paul Johnson, head of the Institute for Fiscal Studies, previously warned how families will be hit by tax rises to pay for the Covid-shaped hole in the accounts.
Experts say the budget deficit needs to be reduced by £30billion to £40billion to stabilise borrowing and prevent debt from rising.
The Institute for Fiscal Studies has said: “Even if the Government was comfortable with stabilising debt at 100% of national income — its highest level since 1960 — it would still need a fiscal tightening worth 2.1% of national income, or £43billion.”
A government source said: “Action needs to be taken now, not in November and not next year, but now.
“The Budget will make a start on that stabilisation. It can’t go the whole way in one fiscal event but it will make a start.”
But coronavirus spending means “thin jam” for other giveaways.
Mr Sunak is under pressure to keep the freeze on fuel duty rises and give a lockdown recovery gift of slashed booze levies plus allocating cash for infrastructure plans in the North.
Labour has insisted: “Now is not the time for tax rises for families or businesses.”
The Sun Says
WE couldn’t believe our ears.
Who was this politician yesterday, soundly agreeing with The Sun that “now is not the time for tax rises for businesses”?
None other than Sir Keir, the Starmer chameleon.
A little more than a year ago, this same man campaigned to install mega-taxing, business-wrecking, Brexit- reversing Marxists in Downing Street. Yet here he was, for once making sense.
Sadly, Chancellor Rishi Sunak seems focused on tax hikes to whittle down the vast Covid debt. We sympathise. But we’re not minded to back any.
We will shed the fewest tears about owners of multiple homes paying more capital gains tax when they flog them.
But increasing corporation tax now, when Britain desperately needs firms to create jobs and growth, is madness.
Does it not bother the Treasury to be plotting tax rises even Labour baulks at?
Pleas not to hike fuel duty — backed by The Sun’s Keep It Down crusade — come as a new eco-petrol is sanctioned for use at UK pumps.
Ministers signed off plans for E10 — a mix of petrol and ethanol made from materials including grains, sugars and waste wood — from September.
The cut in emissions will be like taking 350,000 cars off our roads.
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