Rishi Sunak set to raise taxes in spring to pay off Covid debt bill
Rishi Sunak has signalled that he will raise taxes in the spring of next year to pay off the country’s Covid spending bill.
The chancellor told the Sunday Times today that by spring the conutry must start “returning to sustainable public finances”, after spending more than £200bn on the Covid crisis.
This year’s deficit is set to hit at least £350bn – 12-times higher than pre-Covid estimates.
Sunak has reportedly been at a loggerheads with Boris Johnson about fiscal policy, with the Prime Minister opposing future tax rises.
Johnson does not want to break “the triple tax lock” – an election promise to not to raise income tax, national insurance or VAT – with Sunak looking at instead hiking capital gains tax and reducing higher-rate pensions tax relief.
Sunak joked with the Sunday Times that he should “take [Johnson’s] credit card away”.
When asked about potential tax rises, Sunak said: “Once we get through [the crisis], we’ll have to figure out what the best way of returning to sustainable public finances is.
“I’m hopeful that by the spring, with positive news on both mass testing and vaccines, we can start to look forward.”
It comes as Sunak prepares to deliver the findings of the Treasury’s comprehensive spending review on Wednesday.
This will include £3bn of extra NHS spending for hospitals to address a backlog of operations delayed by coronavirus.
Bloomberg also reported that Sunak will announce the creation of a government-backed infrastructure bank to be set up in the north of England.
The entity will fund infrastructure projects in the Midlands and the North as a part of the Tories’ pledge to “level up” economically deprived parts of the country.
The spending review is expected to include billions of pounds of infrastructure spending as a part of this agenda.