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Since the Covid-19 pandemic began in March, UK public debt has risen as a result of funding lockdown measures such as the employee leave scheme and the downturn in the economy. This British government debt exceeded £ 2 trillion for the first time in history.
The UK is currently borrowing at its highest rate in peacetime.
According to the Sunday Telegraph, the Treasury is pushing for sweeping tax increases, although 10 Downing Street is currently partly opposed to it.
Boris Johnson reportedly supports some tax increases, but is also considering cuts in public spending.
Speaking to the newspaper, a Treasury source said: “If we don’t do something strategic, we are overcrowded.
“What we don’t want to do is increase income tax rates.”
Proposals under consideration are believed to include cutting pension tax relief, an online sales tax, and moving capital gains tax in line with income tax.
Plans to raise taxes on fuel and close loopholes in the inheritance tax system are also being discussed.
Aligning the capital gains tax with the income tax would increase the state tax on asset sales gains for base rate taxpayers from 10 to 20 percent.
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However, the proposals have been condemned by Paul Johnson, who heads the think tank at the Institute for Fiscal Studies.
He said: “We will need tax increases eventually, but it seems unlikely that this budget will be the time they will be announced, at least for 2021, due to uncertainty about the state of the economy.
“Second, the scale of the deficit and the respective spending demands are such that playing with small tax increases is not going to be enough in the next four or five years.
“It’s going to have to be a real substantial change.
“The trick they have to play in this budget is to get the right level of stimulus rather than the other way around, while persuading people that they are taking seriously the need to deal with the deficit in the medium term.”
The government’s licensing plan will end in early November.
There is concern that this could trigger a significant increase in unemployment.
Between April and June, the UK economy contracted 20.4 percent as lockdown measures were eased.
This is the biggest economic depression in the modern history of Great Britain.
Chancellor Rishi Sunak admitted that the government is “dealing with something that is unprecedented.”
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