British finance minister Rishi Sunak is set to increase a tax on business to pay for an extension to Covid-19 support schemes in the budget next month, The Sunday Times reported.
Sunak, in his speech on March 3, will announce he is increasing corporation tax from 19 pence in the pound and will outline a pathway where it rises to 23 pence in the pound by the time of the next general election, the report said. The move will raise an expected 12 billion pounds ($16.8 billion) a year, the report added.
According to the report, at least 1 pence is set to be added to the bill for business from this autumn, at a cost to business of 3 billion pounds, with further rises in subsequent years.
Allies of Sunak clarified he would not increase corporation tax higher than 23%.
These measures will be helpful in paying for an extension to the furlough scheme, VAT cuts and business support loans until at least August.
Unlike the 2010 Conservative-led government, which pursuedspending cuts to rebalance the economy after the globalfinancial crisis, Sunak is expected to defer most of thetoughest decisions about how to pay for that support in hisbudget speech.
"The corporation tax hike will be higher than expected andthe extension of the support schemes will be longer than mostpeople expect," the newspaper quoted a source as saying.
Insiders indicated the stamp duty holiday on propertypurchases would also be extended in line with the othercoronavirus support measures, the report said.
Britain's economy had its biggest slump in 300 years in2020, when it contracted by 10%, and will shrink by 4% in thefirst three months of 2021, the Bank of England predicts.