LONDON (CU)_British finance minister Rishi Sunak is set to increase corporation tax in order to pay for extensions to COVID-19 support schemes and is expected to make this announcement when he delivers his budget next month, the Sunday Times reported. In his speech on March 3, the Chancellor will announce an increase of at least 1 percentage point from the current rate of 19 per cent, initially, the newspaper said, without revealing the source of information.
It said that Sunak will also outline plans for successive increases in the coming years, with the rate likely to reach as much as 23 per cent by the eve of the next general election.
So far, the British government has spent about £300 billion ($420 billion) on various programs to keep businesses afloat during the COVID-19 pandemic, and with one of the fastest vaccination programmes in the world, attention is turning on how to the UK’s excess of borrowings are to be repaid.
Unlike the 2010 Conservative-led government, which pursued spending cuts for economic recovery after the global financial crisis, the Sunday Times said that Sunak’s plans to increase corporation tax will fund an extension of the existing furlough program, business-support loans and value-added tax cuts until at least August.
“The corporation tax hike will be higher than expected and the extension of the support schemes will be longer than most people expect,” the newspaper quoted a source as saying.
According to the Sunday Times, Sunak will also extend a partial sales tax holiday for UK property purchases, while there will also be a delay in an overhaul of commercial property taxes until the fall.
Britain’s economy had its biggest slump in 300 years in 2020, with government borrowing climbing to £270.6 billion in the first 10 months of the fiscal year. According to UK’s Office for National Statistics, the country’s total debt now exceeds £2 trillion.
