The UK, which has been the hardest hit by the pandemic among other developed countries, is preparing to raise taxes to shore up its finances. Importantly, the country has decided to raise taxes for the first time in several decades. Thus, it can become a test of strength for the country's economy.
According to the Treasury, this forced measure should compensate for budget losses collecting up to $33 billion annually. UK Chancellor of the Exchequer Rishi Sunak hinted at some details of the upcoming tax reform. He reassured ordinary citizens that the tax hike would not affect them. Wealthy Brits are expected to bear the brunt of the tax raise. The tax burden on the wealthy may increase to 40% from the current 28%. In addition, capital gains tax is projected to rise to 20% from 10% and the tax on the sale of real estate will grow to 20% from 18%. Besides, the Treasury is preparing to review existing tax benefits and reduce some of them as well as increase fuel duty and corporate income tax. Notably, even with this hike in the tax, it will still be lower than in the neighboring countries, including Germany, France, Italy, and Spain.
In the second quarter of 2020, the UK GDP decreased in annual terms by 21.7% and by 20.4% on a quarterly basis.
