AGL 5.27 Decreased By ▼ -0.13 (-2.41%)
ANL 8.75 Decreased By ▼ -0.04 (-0.46%)
AVN 76.62 Increased By ▲ 0.37 (0.49%)
BOP 5.22 Increased By ▲ 0.03 (0.58%)
CNERGY 4.44 Decreased By ▼ -0.04 (-0.89%)
EFERT 81.32 Increased By ▲ 0.22 (0.27%)
EPCL 49.39 Increased By ▲ 0.38 (0.78%)
FCCL 12.80 Increased By ▲ 0.10 (0.79%)
FFL 5.59 Decreased By ▼ -0.03 (-0.53%)
FLYNG 6.90 Decreased By ▼ -0.03 (-0.43%)
FNEL 4.67 Increased By ▲ 0.02 (0.43%)
GGGL 8.64 Increased By ▲ 0.04 (0.47%)
GGL 14.21 Increased By ▲ 0.06 (0.42%)
HUMNL 5.54 Increased By ▲ 0.05 (0.91%)
KEL 2.63 Increased By ▲ 0.04 (1.54%)
LOTCHEM 28.04 Increased By ▲ 0.33 (1.19%)
MLCF 24.05 Increased By ▲ 0.45 (1.91%)
OGDC 71.13 Decreased By ▼ -0.44 (-0.61%)
PAEL 15.34 Increased By ▲ 0.14 (0.92%)
PIBTL 4.87 Decreased By ▼ -0.04 (-0.81%)
PRL 16.08 Increased By ▲ 0.25 (1.58%)
SILK 1.13 Increased By ▲ 0.08 (7.62%)
TELE 9.07 Increased By ▲ 0.08 (0.89%)
TPL 7.09 Decreased By ▼ -0.07 (-0.98%)
TPLP 19.09 Decreased By ▼ -0.09 (-0.47%)
TREET 21.20 Increased By ▲ 0.06 (0.28%)
TRG 139.80 Increased By ▲ 3.30 (2.42%)
UNITY 16.77 Increased By ▲ 0.01 (0.06%)
WAVES 9.41 Increased By ▲ 0.26 (2.84%)
WTL 1.36 Decreased By ▼ -0.02 (-1.45%)
BR100 4,186 Increased By 30.5 (0.73%)
BR30 15,467 Increased By 131.3 (0.86%)
KSE100 41,819 Increased By 279.4 (0.67%)
KSE30 15,448 Increased By 82.9 (0.54%)
Business & Finance

UK to extend virus support, may raise tax in budget

  • They added that Sunak must also help the economy -- which has shrunk by around 10 percent owing to the pandemic -- adjust to the "triple challenge" of Brexit, Covid and the green energy transition.
Published March 2, 2021
Follow us

LONDON: Britain is expected to keep vast emergency financial support propping up the UK's virus-battered economy when unveiling its annual budget Wednesday, but could also raise tax to fight surging debt.

"The key thing is right now to keep supporting the economy... but also level with people," finance minister Rishi Sunak said Sunday, as Britain from next week begins to exit its third Covid lockdown.

Britain is the worst-hit country in Europe with more than 120,000 Covid deaths and four million cases but its economic recovery hopes have been boosted by its vaccination of millions of adults.

Reports suggest that Chancellor of the Exchequer Sunak will pump out extra billions of pounds to help save jobs and businesses.

But he is expected also to increase corporation tax, or a levy on company profits, from a UK record-low 19 percent while sticking to the Conservative government's pre-pandemic pledge not to increase income tax or value added tax (VAT).

"An increase in corporation tax is likely to be, intentionally or not, the flagship measure," Barclays said in a client note

"Put in perspective, corporation tax is not a main lever in terms of revenues -- around 10 percent of tax receipts -- but probably the path of least resistance as the government explores ways to fix its revenue shortfall."

Prime Minister Boris Johnson's government has in fact cut VAT on food, accommodation and attractions during the coronavirus outbreak.

It has also lifted the threshold at which stamp duty is due on home purchases, helping property buyers and the construction sector.

Both these temporary measures could be extended in the budget, according to economists.

A cross-panel of MPs, in a report Monday, said it was too soon to raise taxes and that corporation tax should eventually be raised only moderately, while being combined with continued support measures for businesses.

"It is clear that a very significant increase in the corporation tax rate would be counterproductive," the Treasury Committee said.

Committee chair and Tory MP Mel Stride noted that with Britain's "public finances on an unsustainable long-term trajectory, our clear message is that Budget 2021 is not the time for tax rises or fiscal consolidation, which could undermine the economic recovery.

"But we will probably need to see significant fiscal measures, including revenue raising, in the future," he added.

Soaring debt

Since April 2020, or soon after the UK's first virus lockdown, the government's net borrowing has ballooned by £271 billion ($378 billion, 314 billion euros), according to recent data.

A big chunk of the outlay has been to keep millions of private-sector workers in jobs via the government's furlough scheme, with the bulk of wages to be paid until the end of April. Again this could be extended.

Analysts argue that Britain must use the budget to both extend coronavirus financial support measures and tackle inequalities exacerbated by Covid.

In a joint report, the Institute for Fiscal Studies and Citi bank noted that lower-income households had not been able to save as much cash as richer counterparts, sparking greater inequality in society during the crisis.

They added that Sunak must also help the economy -- which has shrunk by around 10 percent owing to the pandemic -- adjust to the "triple challenge" of Brexit, Covid and the green energy transition.

The budget is expected to confirm the launch of an Infrastructure Bank with £12 billion in capital and £10 billion in government guarantees.

The bank is set to finance private sector projects in the green economy, focusing on areas such as carbon capture and renewable energy.


Comments are closed.

UK to extend virus support, may raise tax in budget

Fiscal, monetary steps discussed

Dar meets Alvi to blunt IK’s assembly dissolution threat

Elections to take place ahead of Ramazan: Qureshi

Soybean consignments: FTO takes suo motu notice

US warns of Chinese influence in ME

Telenor may consider closing operations

Nepra not happy over ‘tactics’ aimed at blocking CTBCM

Textile value chain: APTMA demands restoration of ‘zero rating’

Business confidence negative: OICCI survey

Housing sector: SHE announces investing $50m in 3 years