Sunak considers sweeping tax hikes to plug COVID-19 hole, newspapers say


LONDON (Reuters) - British finance minister Rishi Sunak is considering a sweeping set of tax increases to help fix the huge hole in the public finances left by the coronavirus pandemic, two newspapers said.

Tax hikes suggested by Treasury officials could raise an extra 20-30 billion pounds a year, the Telegraph and the Sunday Times reported, and some of them could be announced in an autumn budget statement by Sunak.

However, officials working for Prime Minister Boris Johnson are fiercely opposed to a major tax raid on wealthier voters and want to consider spending cuts instead, the Telegraph said.

Britain's public debt has passed 2 trillion pounds ($2.7 trillion), pushed up by emergency spending on Sunak's coronavirus job retention scheme, tax cuts for businesses and consumers and even a dining-out subsidy to coax people back into restaurants.

Pictures of the week: August 23 - 29
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Pictures of the week: August 23 - 29
Keeper Martin Franklin weighs and counts humboldt penguins during the annual weigh-in at ZSL London Zoo, London, Thursday Aug. 27, 2020. The annual weigh-in is a stock-check, for the zoo to check on the health and wellbeing of all the animals in their charge. (Kirsty O'Connor/PA via AP)
LONDON, ENGLAND - AUGUST 26: Ellie Goulding performs at The V&A on August 26, 2020 in London, England. The performance was live streamed for ticket holders during the COVID-19 pandemic. (Photo by Jennifer McCord via Getty Images)
Ed Davey speaks after he was elected as the leader of the Liberal Democrats party, in London Thursday Aug. 27, 2020. The left-of-center Liberal Democrats' acting leader, Ed Davey, comfortably defeated challenger Layla Moran in a campaign that was mostly conducted online because of the coronavirus pandemic.(Stefan Rousseau/PA via AP)
Keeper Mick Tiley weighs Noemie the bactrian camel, during the annual weigh-in at ZSL London Zoo, in London, Thursday, Aug. 27, 2020. (Kirsty O'Connor/PA via AP)
Cyclist seen at the roundabout. Britain's first Dutch-style roundabout opened recently in Cambridge at a cost of �2.3 million, prioritises cyclists and pedestrians. Cyclists have an outer ring on the roundabout, with cycle crossings over each of the four approach roads in a contrasting red surface. (Photo by Keith Mayhew / SOPA Images/Sipa USA)
A nurse holds a painting of Prime Minister Boris Johnson clapping with blood on his hands as part of a demonstration of NHS workers at hospitals across London to demand a 15 per cent pay rise by the government in London, Wednesday, Aug. 26, 2020.(AP Photo/Kirsty Wigglesworth)
Customers enjoy a meat-free burger from the M*** F*** Drive Thru, the first meat-free drive-thru in the UK, on the day it opens in Hackney, east London.
Britain's Prime Minister Boris Johnson gestures, during a visit to Castle Rock school on the pupils' first day back, in Coalville, East Midlands, England, Wednesday, Aug, 26, 2020. Following mounting pressure to change tack, the British government decided late Tuesday to ditch its advice that high school students in England don’t need to wear face masks while at school. In another in a series of abrupt changes in coronavirus-related policy, the government said children in secondary schools — those above 11 years of age — in areas under local lockdown rules, such as Greater Manchester, will have to don face masks when moving around corridors and communal areas. (Jack Hill/Pool Photo via AP)
A surfer enjoys the rough seas in Eastbourne, East Sussex, as winds of up to 70mph are expected along the coast during the next 36 hours along with up to 90mm of rain as Storm Francis hit the UK.
EDITORIAL USE ONLY Florence Milner, general manager UK and Ireland Lime, with e-scooters as Lime launches the UK's first, full-scale e-scooter service in Milton Keynes with 500 scooters deployed, as part of a nationwide launch this year.
Cable cars on the Emirates Air Line link across the River Thames in London. (Photo by Dave Rushen / SOPA Images/Sipa USA)
A museum employee looks towards a marble statue of Crouching Venus, Roman, 2nd century AD, during a press view at The British Museum in London, Monday, Aug. 24, 2020. The museum will reopen to the public on Aug. 27. A new one-way route round the Ground Floor galleries will allow visitors access to many thousands of objects. (AP Photo/Kirsty Wigglesworth)
Paul Young of Los Pacaminos Musical group performs live on stage at Hatfield Park. (Photo by Keith Mayhew / SOPA Images/Sipa USA)
Frome The Stars after winning the Sportsbet Watch Racing Live on Sportsbet App F&M BM58 Hcp at Sportsbet-Ballarat Synthetic Racecourse on August 25, 2020 in Ballarat, Australia. (Pat Scala/Racing Photos via Getty Images)
As numbers of Covid-19 cases in Birmingham have increased in recent weeks, and with the city added as an 'area of enhanced support' on the UK's coronavirus watchlist of critical areas which are under threat of a local lockdown, people interact beneath a new public health advice advertising campaign featuring Bully the Bull Ring bull wearing a face mask with the slogan 'It's NO bull. Keep Brum safe' outside Grand Central station in the city centre on 24th August 2020 in London, United Kingdom. With other areas in the Midlands under localised lockdown, people and businesses are being urged to follow the Coronavirus advice for workplace and family life help reduce the risk. (photo by Mike Kemp/In PIctures via Getty Images)
A view of a State Street building at Canary Wharf business, financial and shopping district of London. (Photo by Dave Rushen / SOPA Images/Sipa USA)
Jack Frost, an ultra rare albino Hedgehog, that has been rescued by Prickly Pigs Hedgehog Rescue in Otley, West Yorkshire. (Photo by Danny Lawson/PA Images via Getty Images)
Women walk past a painting of a bus driver at the Everyday Heroes art installations in the outdoor spaces around the Hayward Gallery and the Southbank Centre,�a free open-air exhibition celebrating key workers in a vivid series of art and poetry commissions. (Photo by Dave Rushen / SOPA Images/Sipa USA)
TROON, SCOTLAND - AUGUST 23: Sophia Popov of Germany kisses the trophy following victory in the final round on Day Four of the 2020 AIG Women's Open at Royal Troon on August 23, 2020 in Troon, Scotland. (Photo by Richard Heathcote/R&A/R&A via Getty Images)
Santas practice their 'HoHoHo's' as they attend a socially distanced Santa school training at Southwark Cahedral in London, Monday, Aug. 24, 2020. Britain's much-loved Santa school will train the nation's Santa's to social distance in order to keep the magic of the Christmas Grotto alive in 2020, despite the government's COVID-19 restrictions potentially interfering with the festive season. (AP Photo/Kirsty Wigglesworth)
SOUTHAMPTON, ENGLAND - AUGUST 24: A general view of groundsman working on the covers as rain delays play on Day Four of the 3rd #RaiseTheBat Test Match between England and Pakistan at the Ageas Bowl on August 24, 2020 in Southampton, England. (Photo by Stu Forster/Getty Images for ECB)
People wearing face masks on the London Eye in Westminster, London. (Photo by Victoria Jones/PA Images via Getty Images)
One of two Twin golden lion tamarins, which were born at Bristol Zoo Gardens to their mum Missy and dad Dourado, cling to their back as they forage around the trees. (Photo by Ben Birchall/PA Images via Getty Images)
England's wicketkeeper Jos Buttler, right, dives to take the catch to dismiss Pakistan's Shaheen Afridi during the third day of the third cricket Test match between England and Pakistan, at the Ageas Bowl in Southampton, England, Sunday, Aug. 23, 2020. (AP Photo/Alastair Grant, Pool)
Santas have their temperature taken as they attend a socially distanced Santa school training at Southwark Cahedral in London, Monday, Aug. 24, 2020. Britain's much-loved Santa school will train the nation's Santa's to social distance in order to keep the magic of the Christmas Grotto alive in 2020, despite the government's COVID-19 restrictions potentially interfering with the festive season. (AP Photo/Kirsty Wigglesworth)
Education Minister Peter Weir (centre) with St JoesphÕs Primary School Carryduff principal Dominic Donnelly (2nd left), follow a group of primary 7 pupils during a visit on the first day back to school, as schools in Northern Ireland reopen to pupils following the coronavirus lockdown. (Photo by Liam McBurney/PA Images via Getty Images)
Restored World War Two landing craft LCT 7074 is transported from from the Naval Base in Portsmouth to its final resting place at the D-Day Story at Southsea. (Photo by Steve Parsons/PA Images via Getty Images)
Members of the public arrive to visit Windsor Castle on 23rd August 2020 in Windsor, United Kingdom. The Sunday Times has reported that the Queen will make Windsor Castle her main home for the rest of the year following her summer break at Balmoral rather than returning to Buckingham Palace because her household arrangements at Windsor Castle are believed to offer the greatest protection from COVID-19. (photo by Mark Kerrison/In Pictures via Getty Images)
PERTH, SCOTLAND - AUGUST 23: Hibernian's Christian Doidge (left) competes with Jamie McCart during the Scottish Premiership match between St Johnstone and Hibernian at McDiarmid Park, on August 23, 2020, in Perth, Scotland. (Photo by Bill Murray / SNS Group via Getty Images)
A small sail boat off the coast of Dover in Kent. (Photo by Gareth Fuller/PA Images via Getty Images)

Sunak has previously said some taxes will need to rise over the medium term.

But he is under pressure to provide more support for employers when the job retention scheme - under which the state has paid 80% of salaries for most workers kept on in their jobs - expires at the end of October.

The reported tax increases under consideration ranged from a sharp jump in corporation tax - which is currently far below the international average - cutting incentives for private pension contributions and increasing capital gains tax rates.

The Sunday Times said a reduction in foreign aid was under consideration. The Telegraph said officials were considering an end to a freeze on fuel duty and a tax for online retailers.

The Sunday Times said Sunak was considering a proposal to boost the corporation tax rate to 24% from 19% to raise 12 billion pounds next year, rising to 17 billion in 2023-24.

A Treasury spokesman said: "We do not comment on speculation about tax changes ahead of fiscal events."

Britain's economy shrank by a record 20% in the second quarter, the largest decline of any big country. There have been signs of a bounce-back but unemployment is expected to rise sharply as the job retention scheme is wound down.

Paul Johnson, director of the Institute for Fiscal Studies think-tank, said it was too soon to raise taxes because of the uncertainty over the economy. The economy also faces a possible shock if London and Brussels fail to strike a trade deal soon on the relationship with the European Union once a Brexit transition period expires at the end of the year.

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