Forced to raise taxes to fix the economy

Forced to raise taxes to fix the economy
Forced to raise taxes to fix the economy

Forced to raise taxes to fix the economy

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LONDON (Reuters) – Britain’s Treasury Secretary Jeremy Hunt said on Saturday he will need to increase taxes in his budget this week to help shore up public finances and ease a possible prolonged recession, the Sunday Times newspaper reported.

Hunt is trying to restore Britain’s credibility among investors in its first budget since Rishi Sunak replaced Liz Terrace as prime minister last month, with a promise to reverse its economic policy mistakes led by a series of unfunded tax cuts.

Trace’s “mini-budget” in September led to a bond market collapse that increased borrowing costs and eventually forced her to resign.

“This will be a great moment of choice for the country and we will put the people at the forefront of ideology,” Hunt said in an interview with the Sunday Times.

Along with deeper spending cuts, Hunt and Sunak are trying to prepare the Conservative Party for tax hikes that could reignite tensions within the party that forced Truss to resign and allowed Sunak to become Britain’s fourth Tory prime minister since 2016.

According to the newspaper, Hunt plans to close a £55 billion ($65.1 billion) gap in the UK budget by freezing caps and increases on income taxes, public insurance, inheritance taxes and pensions for another two years.

The newspaper said he also intends to halve the capital gains tax exemption and lower the limits for paying the additional income tax rate from £150,000 to £125,000 a year.
“What I can promise people is that I’ll be honest about the scale of the problem and fair in the way I’m dealing with these issues, and yes that means people with higher incomes will be bearing the brunt.” , Hunt said.

Thursday’s budget will include forecasts similar to those of the Bank of England, which earlier this month warned the country was facing a long recession.

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