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Chancellor Rishi Sunak has been urged not to introduce tax increases into his November budget by conservative supporters who argue they would hurt the economic recovery.
The intervention followed speculation that the Treasury could raise £ 20bn through additional levies to deal with the fallout from Covid-19.
Stephen Barclay, the chief secretary of the Treasury, declined to comment on reports that pension tax relief could be cut, capital gains tax increased, and corporation tax adjusted from 19% to 24%.
The prospect of such large tax increases raised concern from several Conservative MPs. Congressman Marcus Fysh said “counterproductive” tax increases were the wrong answer to the current situation.
He told the Palestinian Authority news agency: “The focus must be on the incipient recovery in the economy, which is the surest way to maximize the number of available jobs and balance income with spending.
“We shouldn’t take chances talking about counterproductive tax increases. I am sure the chancellor is well aware of this and I hope that he will consider urgent tax incentives to boost activity, investment and productivity.
The UK’s public sector debt reached over £ 2 trillion for the first time in history in August, when ministers invested billions of pounds to support the economy during the pandemic, new figures revealed.
The Office for National Statistics said official bodies borrowed £ 26.7 billion in July, the fourth-highest amount of any month since records began in 1993.
It raised debt to around £ 2.004 trillion for the first time in history, and it means that public sector debt is higher than gross domestic product, the value of everything that is produced in the UK in one year.
Fysh added: “Exceptional spending due to current circumstances can and should be financed over the long term rather than through the usual short-term budget balancing processes, but the Chancellor has been right to highlight that the scope this provides to Covid’s current emergency spending programs is not unlimited.
“We need to help the economy not to strangle it. These mixed messages are in themselves harmful and must be stopped. “
Conservative Commons education committee chair Robert Halfon said “normal people” and small and medium-sized businesses should be saved.
He told BBC Radio 4’s Westminster Hour: “I hope that whatever you do does not increase the taxes that affect ordinary people in terms of the cost of living.
“I have no problem with taxes going up for big companies or multi-billion pound tech companies.
“But we have to be very clear that we are not going to be the party that is increasing the fuel tax or playing with the pension, for example, the triple lock pension, because this has a great impact on the cost of living.
“The important thing is not to do anything that affects the cost of living for normal people who have really fought during the coronavirus. And many of them will be worried about their future jobs and will not have much money to spare. “
Former Conservative Cabinet Minister John Redwood said: “You cannot impose taxes for faster growth and more prosperity. We need policies to promote more jobs and activity to reduce the deficit ”.
Barclay said the Treasury would study how to deal with the economic “scars” of the Covid situation.
He told Times Radio: “Treasury ministers don’t get involved in what a budget will or won’t do and particularly on tax measures before that, that’s for the chancellor, the budget.
“The key objective within the treasury is to achieve growth. So there is a balance between the other three moving parts of debt, spending, spending that fuels that, and taxes.
“And what is your trade-off then between your spending measures and your fiscal measures? The real goal is to reduce the economic scars of Covid. “
