UK to raise business tax to pay for COVID-19 support

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.

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 pursued spending cuts to rebalance the economy after the global financial crisis, Sunak is expected to defer most of the toughest decisions about how to pay for that support in his budget speech. "The corporation tax hike will be higher than expected and the extension of the support schemes will be longer than most people expect," the newspaper quoted a source as saying.

Insiders indicated the stamp duty holiday on property purchases would also be extended in line with the other coronavirus support measures, the report said. Britain's economy had its biggest slump in 300 years in 2020, when it contracted by 10%, and will shrink by 4% in the first three months of 2021, the Bank of England predicts.

Britain could restrict imports of European mineral water and several food products under retaliatory measures being considered by ministers over Brussels' refusal to end its blockade on British shellfish, the Telegraph reported. Senior government sources pointed to potential restrictions on the importing of mineral water and seed potatoes, the report said.

Meanwhile, The European Union is planning to create a new system to rank flights and aircraft according to their carbon footprint, German weekly Welt am Sonntag reported.

The paper, citing documents, said the European Union Aviation Safety Agency (EASA), the continent's safety regulator, has put out a tender to develop a classification system to that effect. The project is aimed at "providing reliable, comparable and verifiable information" to clients to help them make sustainable decisions, the paper cited the documents as saying, adding details of the eco seal would be firmed up by the end of 2022.

EASA was not immediately available for comment outside of normal business hours. Even before the coronavirus pandemic hit global airlines, business travel had been beginning to come under pressure as corporate clients became more alert to environmental and sustainability targets.

As part of the EU's spending plans, nearly 550 billion euros ($666 billion) could be spent on climate over 2021-27 - a massive sum, but far below the 2.4 trillion euros in investment researchers say is needed to meet EU climate goals.