The Chancellor is said to be considering a number of tax hikes and reforms in order to recoup funds following huge Government spending during the pandemic. The UK has narrowly avoided a double dip recession, but the unprecedented economic hit saw UK GDP drop to 25 percent lower in April 2020 than it had been two months earlier in February 2020. Economic activity picked up over the spring and summer, reflecting the opening up of the economy and pent-up demand from the first lockdown. This was followed by a further short-lived lockdown in November. GDP was nine percent lower in November than before the pandemic.
The new restrictions imposed over New Year and into 2021 resulted in another contraction.
The country has endured its biggest annual decline in 300 years. The Office for National Statistics (ONS) said GDP slumped by 9.9 percent in 2020, the biggest fall since 1709 when Britain was hit by the Great Frost and the economy contracted by 13 percent.
Chancellor Rishi Sunak will set out his plan in March on how to revive the UK economy, and some have urged him to tax the wealthiest.
A report released in January revealed that almost £800billion of assets held by Britain’s richest households has been missed by official measures.
As a result, Jack Leslie, economist at the Resolution Foundation who uncovered the hidden fortunes, argued for reformed wealth taxes to get back some of this money.
She said: “The UK has undergone a wealth boom in recent decades, which has continued even while earnings and incomes have stagnated.
“But official data has struggled to capture these gains, and misses £800billion of assets held by the very wealthiest households in Britain.
“With the country facing a decade of mounting fiscal pressures, now is the time for Britain to do a better job of taxing its record levels of wealth by reforming our capital gains, inheritance and property taxes.”
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“If we care about our employment rate, if we care about people’s business and if we care about the economy we should not be considering tax rises right now.”
This comes after reports suggested Mr Sunak could raise £6billion in tax by freezing personal income tax allowances.
The Telegraph reported last week that the Chancellor could abandon annual increases to the £12,500 and £50,000 income tax thresholds.
This could leave tens of millions of Britons handing more money to the Government.
This scenario is described as a “stealth tax” if other duties are not hiked.