UK Chancellor Rishi Sunak will suspend plans to increase taxes until later this year, The Times reported on Friday, citing an unnamed government source.
According to the source, the upcoming budget scheduled to be introduced on 3 March was the "wrong time" to raise taxes and the plans are likely to be shelved until autumn at the earliest.
“We’ll be in the midst of a recession and living under severe lockdown restrictions,” the anonymous source told the newspaper.
“The mutant strain of the virus has changed our entire perspective on this. It’s too soon."
However, the finance minister rejected demands to extend temporary tax reductions on property purchases, known as stamp duty, that is set to end at the end of March, according to the outlet.
There's no denying the next few weeks are going to be difficult.— Rishi Sunak (@RishiSunak) January 8, 2021
But the end is in sight.
That’s why we’ve redoubled our efforts to protect businesses, jobs and incomes. #PlanForJobs https://t.co/bGr9V9Pbe9 pic.twitter.com/4YLTDlwGPO
Economic analysts claim that the temporary tax alleviation saw a pandemic-relate boom in the UK housing market as demand for larger homes with gardens increased amid the coronavirus lockdown restrictions.
On Tuesday, Mr Sunak introduced a £4.6 bln ($6.2 bln) support package for struggling firms in order to alleviate the recession that's predicted to grip the country following the UK's third national lockdown.
The new lockdown grants will help businesses to get through the months ahead.— Rishi Sunak (@RishiSunak) January 5, 2021
Crucially, they’ll also help sustain jobs, so workers can be ready to return when they are able to reopen. #PlanForJobs https://t.co/dHEpiunX78 pic.twitter.com/I1PqHNag7M
During the first lockdown, the UK chancellor initiated an emergency stimulus package worth £280 bln, which included a jobs protection scheme that has since been extended to April 2021.
The UK economy is predicted by major analysts to fall into recession after witnessing sharp reductions in growth in the final quarter of 2020 as well as the first quarter of 2021. This comes following a record 25 percent fall in productivity during the first two months of lockdown from March last year.
Westminster is expected to borrow £370 bln this year as well as introduce potential tax increases, such as cutting pensions tax relief for top earners, raising capital gains tax, and introducing a new digital sales levy for online suppliers.