Rishi Sunak is drawing up plans to implement £30bn in tax rises to plug the budget black hole left by the government’s coronavirus response.
The measures reportedly under consideration include raising corporation tax and capital gains tax, breaking the pension triple lock guarantee and cutting foreign aid.
The Sunday Times reports that this would include raising corporation tax from 19 per cent to 24 per cent, a measure which would raise £12bn next year and £17bn in 2023-24.
The potential increase to corporation tax would come after years of corporation tax cuts by former chancellor George Osborne brought it down to 19 per cent – among the lowest among OECD countries.
Chief secretary to the Treasury Steve Barclay refused to rule out an increase in corporation tax, or any other tax rises, when speaking to Times Radio today.
“There are always a whole range of measures and as soon as one starts to say, well I rule this one out you’ll cherry pick as to which ones one hasn’t done,” he said.
Changes to capital gains tax on investment properties could see people pay it at the same rate as they pay income tax, instead of at 28 per cent.
The pension triple lock – a part of the Tories’ election manifesto – sees pensions rise by the highest of inflation, the country’s average annual wage increase or 2.5 per cent.
However, this could be scrapped in a bid to save billions of pounds.
The measures will likely be very unpopular among Tory MPs and grassroots supporters as they are taxes squarely aimed at the wealthiest sections of British society.
One Tory ally said the government would have no choice, after this year’s emergency coronavirus measures are set to push the budget deficit to a record £350bn.
The ally told the Times: “The political reality is that the only place you can get the money is from the better-off. The polling shows this would be popular.”
The proposals have been harpooned by free market think tank the TaxPayers’ Alliance, with its chief executive John O’Connell saying they are the “exact opposite of what Britain needs”.
“After the monumental national effort to get the country through the crisis, tax increases would mean brutal taxpayer austerity and only serve to kick the private sector while it is down,” he said.
“Instead ministers must look at their own budgets and aim to save before they spend, in order to get the public finances back in shape.”