Mon, Nov 14, 2022 page11

• UK taxes to rise to patch economy

  RESTORING CREDIBILITY: The British finance minister said he must go against his party’s ideology so he can repair a US$65 billion budget hole and ‘put people first’

  • Reuters, LONDON
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  British Chancellor of the Exchequer Jeremy Hunt said he would raise taxes in this week’s budget to fix public finances and soften a potentially long recession, he told the Sunday Times in an interview published on Saturday.

  Hunt is trying to restore the UK’s credibility among investors in the first budget since British Prime Minister Rishi Sunak took office last month with a vow to undo economic policy mistakes, chiefly a series of unfunded tax cuts.

  Former British prime minister Liz Truss’ “mini-budget” in September set off a bond market slump that sent borrowing costs soaring and ultimately forced her to resign.

  

  British Chancellor of the Exchequer Jeremy Hunt arrives at the British prime minister’s residence in London on Nov 1.

  Photo: EPA-EFE

  “This is going to be a big moment of choice for the country and we will put people ahead of ideology,” Hunt told the newspaper.

  “You’re going to have a Conservative chancellor who is putting up taxes that, you know, go against the very reason that he went into politics,” he said. “You have to do what is right for the country and the situation that we’re in and unfortunately that does mean tax rises.”

  In addition to more spending cuts, Hunt and Sunak are preparing their Conservative Party for tax increases that could reignite tensions in the party that forced out Truss and allowed Sunak to become Britain’s fourth Conservative prime minister since 2016.

  The newspaper said Hunt plans to tackle a ￡55 billion (US$64.97 billion) hole in Britain’s budget by freezing thresholds and allowances on income tax, national insurance, inheritance tax and pensions for a further two years.

  He also intends to halve a tax-free allowance for capital gains tax and lower the threshold for paying the additional rate of income tax to ￡125,000 a year from ￡150,000, the Sunday Times said.

  “What I can promise people is that I will be honest about the scale of the problem, and fair in the way that I address those problems, and yes, that does mean that people with the broadest shoulders will bear the heaviest burden,” he said.

  Thursday’s budget plan includes forecasts similar to those of the Bank of England, which earlier this month warned of a long recession ahead.

  “I think it’s very likely ... the question is not really whether we’re in recession, but what we can do to make it shorter and shallower,” Hunt said in the interview.

  He also said he would work in cooperation with the central bank to control inflation and the global rise in interest rates, which is adding to the strains on Britain’s economy.

  “The number one thing that I can do is help the Bank of England bring down inflation,” he said, adding that he wants to give confidence to businesses and households to invest and spend.

  “If I can give them certainty that we have a plan to tackle inflation, to bring back stability to the economy then... that will be job done, as far as Thursday is concerned,” Hunt said.

  Hunt said he is likely to commit only ￡20 billion to extend the government’s cap on energy bills for six more months after April, a third of its estimated ￡60 billion cost in its first six months, meaning bills are likely to rise.

  However, Hunt is also considering a large package of support to shield pensioners and benefit claimants from higher power bills, the newspaper said.
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