Live Q&A: How will we pay for the pandemic?
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The chancellor has pumped hundreds of billions of pounds into supporting the UK economy through the pandemic, yet Rishi Sunak admits the government faces “difficult choices” when it comes to rebalancing the books.
Faced with a yawning deficit in the public finances, how could he raise taxes without choking off the economic recovery as the UK emerges from lockdown?
One of the biggest questions is whether the chancellor should be raising taxes at all. The recent summer statement saw him cut taxes including stamp duty and VAT to stimulate demand. While the cost of borrowing is so low, some groups argue that tax rises should be deferred for when the economy is in better shape.
Could the chancellor be tempted to put the squeeze on higher earners? Fears of a “wealth tax” increased last week when the independent Office of Tax Simplification started a review into capital gains tax (CGT) following hot on the heels of its probe into inheritance tax (IHT) last year.
This week, MPs have called for a review of pension tax relief, which costs the exchequer about £38bn a year and predominantly benefits higher-rate taxpayers, and a wider crackdown on tax avoidance schemes.
Although the Conservatives made manifesto pledges not to raise income tax, national insurance or VAT, there is a growing expectation that the “triple lock” governing increases to the state pension will be suspended for two years.
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