Ministers ‘consider plans to replace council tax and stamp duty with property levy’ which would hit Tory Shires hard as Rishi Sunak ‘weighs up hiking corporation tax’ at Budget on March 3 to start paying for Covid crisis
- Rishi Sunak will deliver Budget on March 3 amid reports he could increase taxes
- It is thought he is considering putting up corporation tax to pay for Covid crisis
- Officials said to be looking at long term plan to replace council tax, stamp duty
Ministers are considering replacing council tax and stamp duty with a new national property levy which could hit Tory Shire heartlands hard, it was claimed today.
The Government is said to be looking at what the impact would be of doing away with the two taxes.
But the suggestion of replacing them with a property tax, likely based on the current value of a home, could spark a Conservative rebellion.
Chancellor Rishi Sunak is said to be considering increasing corporation tax at the Budget on March 3 while officials are reportedly examining scrapping stamp duty and council tax
Replacing stamp duty and council tax with a property levy would be likely to spark a Tory rebellion in the Conservative Party’s heartlands. Guildford High Street is pictured on January 5
The Covid-19 pandemic has prompted ministers to borrow money at record levels in order to prop up UK plc.
The UK’s national debt continues to climb above £2trillion – its highest level since 1962.
Official forecasts from the Office for Budget Responsibility (OBR) predict borrowing could reach £393.5 billion by the end of the financial year in March, which would be the highest seen since the Second World War.
Meanwhile, official figures publishes last week show the UK is on track for another recession, with GDP tumbling by 2.6 per cent amid the second coronavirus lockdown in November.
There are growing concerns about how the crisis will be paid for and Mr Sunak is said to be considering increasing corporation tax as a first step.
At the 2020 Budget ministers announced that the main rate of corporation tax would remain at 19 per cent.
A corporation tax hike is viewed by some in Whitehall as an appropriate first step in starting to pay for the current crisis because it would target business profits rather than struggling households.
It is thought that Mr Sunak could go ahead with such a move if the UK’s coronavirus vaccination programme continues to go smoothly.
A senior Whitehall source told the Sunday Times: ‘Things would have to go pretty badly wrong for us not to begin some consolidation in the budget.’
It is thought Mr Sunak could use the Budget to announce an extension of the Government’s furlough programme beyond the end of April while a stamp duty holiday could be extended.
The Chancellor announced the stamp duty holiday at the start of July and it is due to last until March.
GDP tumbled by 2.6 per cent in November as the second coronavirus lockdown hammered the economy
Coronavirus is thought to have inflicted the worst hit to GDP since the Great Frost of 1709
Ministers and officials are also said to be looking at long term plans to replace stamp duty as well as council tax with a national property levy.
No changes are believed to be imminent but the Treasury is examining what the impact would be.
One of the main criticisms of the council tax system is that it is based on property valuations dating back to 1991 while stamp duty is viewed by critics as a barrier to people getting onto, and moving up, the housing ladder.
However, a national property tax based on more up to date valuations would almost certainly prompt a backlash in Tory Shire heartlands where owners of expensive homes would likely see their bills increase.