Sunak accused of ‘playing politics’ with pandemic amid tax hike speculation

THE Chancellor has not ruled out raising taxes before cutting them ahead of the next general election amid accusations the Conservatives are playing politics with the pandemic.

Ahead of Wednesday’s Budget, Rishi Sunak stressed he is in favour of low taxes but warned he needed to repair public finances from the “enormous shock” of the pandemic with an “honest and fair” plan.

He said he does not “recognise” claims he told MPS in private he would raise taxes now before cutting them in a pre-election Budget. However, he declined to rule out the possible plan, leading to Labour accusing him of “playing politics with the recovery”.

Mr Sunak said he must “level with people”, with Covid having had an “enormous hold on our economy” that will cause debt to “rise indefinitely” if borrowing continues after the recovery.

But he suggested current support packages, such as the furlough scheme due to expire at the end of April, would continue as England comes out of national lockdown in the coming months.

No clarity has been provided as to whether Scotland will continue to receive the same level of financial support if the lockdown is eased at a slower pace north of the Border. He said he wants to “support people and businesses along that path” to ending restrictions steadily until June 21, as set out by Prime Minister Boris Johnson.

“I think in the short term what we need to do is protect the economy and keep supporting the economy through the road map, and over time what we need to do is make sure our public finances are sustainable,” Mr Sunak said.

Mr Sunak is said to be considering a freeze on the £12,500 point at which people start paying the basic rate of income tax and the £50,000 threshold where they begin paying the higher 40p rate, as he aims to raise £43 billion a year.

The move would allow him to raise funds without breaking the manifesto pledge that guaranteed the Conservatives would not raise the “rate” of income tax. But it was estimated the move would push an extra 1.6 million people into a higher tax bracket before the next General Election is due in 2024.

Shadow chancellor Anneliese Dodds said the party would consider backing an increase on corporation tax “if we see a longterm plan”.

She said the Chancellor “is trying to get any tax changes out of the way quickly, get them out of the way, so that they can then have a General Election when they can cut taxes”.

The shadow chancellor will today urge Mr Sunak to set out a “responsible plan” that puts Britain on the path to a “better, more secure future”, condemning “12 months of irresponsible decision-making” during the pandemic.

Labour’s shadow chief secretary to the Treasury, Bridget Phillipson, went further to accuse him of “playing politics with the recovery, threatening hard-hit businesses and families with immediate tax rises now just so he can cut them before the election”.