Ex-UK Prime Minister David Cameron called on Chancellor Rishi Sunak not to avoid including tax rises in the Budget next week amid speculation he will announce a hike in corporate levies to pay for the UK’s revenue spending throughout the coronavirus crisis.
While speaking to CNN on Thursday, Cameron warned that lifting taxes on corporations would not be the correct policy before the UK's has sufficiently re-opened.
He compared the ongoing pandemic to World War II and said that piling "tax increases on top of that before you’ve even opened up the economy wouldn’t make any sense at all".
“I think it’s been right for the government here in the UK and governments around the world to recognise this is more like a sort of wartime situation", he said.
Sunak is expected to introduce a raise in corporate tax rate from 19% to 25% in order to pay off the government’s spending, which is believed to amount to £300bn as emergency COVID support will likely be extended until the summer.
This comes as economic think tanks are urging for further state investment into the economy to fuel coronavirus recovery. In 2020, a report by the United Nations Conference on Trade and Development (UNCTAD) urged governments around the world to carry out "bold" public spending initiatives in order to stimulate economic growth.
Tax rates in Canada, France, Germany, Italy, and Japan are all over 25%. China, the only country that experienced positive economic growth in 2020 according to World Economic Outlook data, has a standard tax rate of 25%.
During his time as Prime Minister, David Cameron oversaw widespread austerity cuts to UK public spending in a stated attempt to lower the national deficit.
While the deficit declined, the UK's national debt soared under Mr Cameron, rising by 53% between 2010 and 2016.
