Chancellor Rishi Sunak is reportedly gearing up to offer some stunning budget boons next week while shelving plans for tax rises, as the UK government seeks to inject major stimuli into the economy later this year, writes the Daily Mail.
The Chancellor was reportedly considering freezing tax rises, including a 5p increase in fuel duty that would have targeted drivers, after concluding that cars were too vital a transport safety measure during the pandemic, according to Treasury sources.
RAC fuel spokesman Simon Williams was quoted as saying:
“Many drivers see their cars as a safe way to carry out essential journeys and have come to see having access to a vehicle as more important during the pandemic. If the Chancellor were to raise fuel duty, he would also risk choking any economic recovery as it will lead to increased costs for consumers and businesses.”
Furthermore, Sunak is reportedly poised to announce VAT and business rate cuts from 20 percent to 5 percent for the struggling hospitality and tourist industries, a cabinet source is cited as confirming.
Sunak was also said to be preparing to extend the stamp duty holiday - which had been due to expire on 31 March - until the end of June.
Last year, the Treasury announced it would temporarily raise the stamp duty threshold from £125,000 to £500,000 for property sales in England and Northern Ireland, in a move anticipated to boost the housing market which had taken a financial hit amid the coronavirus crisis and ensuing lockdown.
The £50Bln furlough scheme will be extended until the end of June when the Government hopes to lift all restrictions. The latter was first introduced last year in a bid to prevent mass redundancies amid the pandemic, but it has been extended several times and was set to finish at the end of April.
In the pipeline were reportedly dramatic fiscal stimulus plans for the economy post-lockdown, possibly incorporating the introduction of free vouchers for High Street shoppers, in a "Shop Out to Help Out" scheme.
James proposes that stimulus measures should be targeted at supporting labour market to lower unemployment, extending the £20 per week UC uplift to help those on lower incomes, green investment, and spurring a recovery in high street retail. pic.twitter.com/EJOy4bMRTV— Resolution Foundation (@resfoundation) February 25, 2021
The Resolution Foundation think-tank said a £100Bln stimulus was needed to "increase the chances of a strong recovery from the pandemic-induced slump and to ensure the recovery reaches firms and families," as it called on the Chancellor to give away £9Bln in vouchers for shoppers.
Lower alcohol duty was being ostensibly considered for restaurants and pubs, with non-essential retail at present expected to re-open on 12 April.
Tory MP Giles Watling earlier urged ministers to prevent pubs and restaurants from being undercut by "cheap supermarket booze", with Prime Minister Boris Johnson saying that the Chancellor was "looking very closely" at the idea.
Alongside higher levies on alcohol sold at supermarkets the move is hoped to help local traders. Another possible move is to promote last summer’s Eat Out to Help Out scheme.
“There is broad agreement that the support package has to go hand in hand with the roadmap,” the source was cited as saying, in reference to the government-announced COVID roadmap seeking to end the lockdown in England by 21 June this year.
The Treasury will reportedly set aside billions of pounds to prop up the beleaguered economy through the remainder of the lockdown, in anticipation of a much-needed rally when restrictions are eased in the spring and summer.
Sunak is expected to warn of long-term fallout for the UK from growing debt, and hint that a rise in corporation tax from 19 percent to at least 23 percent before the next election would be imminent.
There was no official comment from the Treasury regarding the contents of Wednesday’s budget.
Amid the speculation, the Treasury was cited by The Independent as saying:
“Our priority throughout the past year has been to protect as many jobs as possible - which is why we’ve invested more than £280Bln to support jobs, businesses and our public services. We will continue to invest in protecting and creating jobs through the remainder of the pandemic and through recovery, and we will set out further details via the next stage of our Plan for Jobs at the upcoming Budget.”