BORIS Johnson will have no choice but to pay for the coronavirus crisis by hiking taxes and bringing back austerity, former Chancellors have warned.
The PM has ruled out a return to austerity to pay for the multi-billion pound coronavirus bailouts and has signalled he intends to stick by his election promise not to hike income tax, National Insurance contributions or VAT.
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But on Wednesday George Osborne said that in the long-term the Government will have to use these “big money raises” to pay for the estimated £300 billion hole in the public finances.
And Mr Osborne - the mastermind of Tory austerity in the last decade - said spending cuts in some form will be needed. He compared the situation facing him when he had to repair the public finances after the financial crash in 2010.
He told the Commons Treasury committee: “You don’t have to call it austerity, you don’t have to tell the public you’re doing it; you could try and get away with it as a Government and pretend you’re not doing it.
“But the truth is you’re going to have to make judgements about levels of tax, levels of spending. I raised VAT, because we had to take big steps to repair the public finances.
“You can talk as much as you like about taxing billionaires, taxing tech companies and all those things and it all adds up and helps.
“But the big money raises are your income taxes, your national insurances, your VATs - those big central taxes that the government relies on.
“And that’s why you see now speculation about national insurance, so to say ‘you know we’re just going to get the billionaires to pay for it’ is a cop out from the real question that both the government and opposition have to confront.”
You don’t have to call it austerity, you don’t have to tell the public you’re doing itGeorge Osborne
But another ex-Tory Chancellor Philip Hammond suggested the Government should deliver tax cuts in the short term to stimulate economic activity.
Appearing at the same committee, he said: "Certainly I don’t think there’s any economic logic in increasing taxes in the short term, I think we all accept that the UK is a credit worthy mature very large economy can carry more debt in the context of the short term.
"There may be a need for some short term fiscal stimulus to the economy and that could be delivered through tax cuts - that could be VAT cut."
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At Prime Minister’s Questions on Wednesday Mr Johnson said the green economy will be essential for the country’s success in recovering from the looming coronavirus recession.
Chancellor Rishi Sunak is said to be planning a “green industrial revolution” to help to create jobs for people who lose their jobs from the pandemic.
A Downing Street spokesman said on Wednesday: “The economic decisions we’ve made during this pandemic will put us in a strong position to bounce back in the future and carry on delivering the agenda set out earlier this year, continuing to invest in industries, infrastructure and jobs that can cut emissions, protect our environment and grow our economy.”
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