Don’t raise taxes or risk harming coronavirus ‘bounce back’ and causing huge recession, Boris Johnson warned

0
171

RAISING taxes will risk harming the coronavirus “bounce back” and could make a recession even worse, Boris Johnson has been warned.

It comes after a leaked Treasury document discussed how to raise extra cash to balance the books – with options for income tax hikes, a public sector pay freeze, or the end of the triple lock on pensions.

Rishi Sunak and Boris Johnson are being urged not to raise taxes for millions of people

And national economic growth slumped by a massive 5.8 per cent in just March alone, it was revealed yesterday.

Overall, the UK economy contracted by 2% in the first three months of 2020, putting Britain on course for a huge recession.

HOAR reported last night that hard-working heroes on the NHS frontline battle against Covid-19 won’t be the ones to pay for it, and the PM and Chancellor have ruled out a freeze on their pay.

Cuts to education and the NHS budgets, as well as their huge promised spending on upgrading the nation’s infrastructure, have also been ruled out.

A source close to the Chancellor said: “Our public services right now are doing heroes’ work. That’s not going to be forgotten in the future”.

But tax changes are still on the table, and Rishi Sunak refused to rule it out yesterday.

One senior source added: “We’d be mad to start ruling out tax changes now. That’s a fools errand”.

The Treasury has predicted that the pandemic will cost the exchequer £300 billion this year.

One cabinet minister told The Times the cash should be paid back slowly over time, rather than hiking taxes for millions.

They said: “It is completely the wrong approach; it would entrench the downturn.

“We should be looking at policies that open up the economy — we will need fiscal stimulus. Taxes need to be lower rather than higher.”

And former Tory leader Iain Duncan Smith said: “What we cannot do is exit from this and enter into a period of clawback.

“That would defeat the objective of growing the economy. Growth is going to be critical.”

Raising income taxes would also be breaking one of the Tories’ election promises, on which they were put back into power only last December.

They vowed not to raise income tax, national insurance or VAT for the entire parliament.

Ministers distanced themselves from the document yesterday, which they dubbed “speculative” and insisted had only been drawn up by officials.

Transport Secretary Grant Shapps echoed the PM’s declaration two weeks ago that another era of spending cuts is likely.

Mr Shapps insisted: “We are not going back to the world of austerity”.