The government “will have to raise taxes and freeze wages to cover the £ 300 billion coronavirus bill”

The government will have to raise taxes and freeze wages to pay the estimated £ 300 billion bill for coronavirus, according to a leaked document.

A confidential Treasury assessment said the UK deficit could hit £ 337 billion this year due to the crisis.

Measures that include income tax increases, a public sector wage freeze, and an end to the triple lockdown on pensions may be required to finance debt.

According to the Daily Telegraph, Chancellor Rishi Sunak’s report said that filling the gap in public finances through increases in tax revenues would be “very difficult without breaking the fiscal blockade.”

“To increase the fiscally significant amounts, we would have to raise the rates / thresholds on one of the broad-based taxes (IT, NICS, VAT, CT) or reform one of the largest tax breaks (for example, the pension tax) “, According to the document.

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The March Budget had forecast that the deficit this year would be £ 55 billion, but the document, dated May 5, predicts the worst case scenario of £ 516 billion, reaching a cumulative £ 1.19 trillion in five years.

While the best case scenario, relying on the recovery of the economy, would mean a deficit of £ 209 billion.

Increasing basic taxes of around 5p would increase around £ 30 billion, according to the report.

Millions of workers will still receive their wages largely paid by the state for months as the financial and human cost of the coronavirus crisis continues to rise.

The licensing plan, which currently supports 7.5 million jobs, will run until the end of October, although employers are expected to pick up a portion of the bill starting in August as the economy reopens.

The human figure for the Covid-19 pandemic was uncovered in official figures indicating that there have been more than 40,000 coronavirus-related deaths in the UK.

The leave scheme, which pays 80% of a worker’s salary up to a monthly cap of £ 2,500, will remain unchanged until the end of July, a one-month extension.

Economists at the Institute for Fiscal Studies suggested it could cost £ 10 billion, bringing the total amount of support provided by the scheme to around £ 60 billion.

Meanwhile, the government rejected the idea of ​​a universal basic income (UBI) in the future, despite support for the scheme in Scotland.

The UBI case, which sees governments providing citizens with a basic rate of income, regardless of financial gain, has gained momentum over the weeks as millions of people are out of work during the crisis.

But business secretary Alok Sharma said that while UBI was being tested in other countries, “it has not been carried out.”