Taxes are rising everywhere thanks to coronavirus. But in Britain, the wealthiest will be hit the hardest

The pencilled-in rises seem set to raise an additional £30bn in revenue, says Hamish McRae. But unfortunately, it won’t be enough to fix things

Rishi Sunak with Mark Carney meet in Downing Street ahead of the Budget in March (G (Getty Images)

Britons will have to pay more tax, but so too will everyone else across the developed economies. That might seem small comfort, but it is the reality of the post-coronavirus world. The great swath of income and wealth that has been lost has to be made up somehow, and it will be a mix of taxpayers and savers that pay it: taxpayers obviously through higher taxation, savers less obviously through low or negative real returns on their savings.

There are questions about the size of the bill, for the faster economies recover, the lower the costs. There are questions about the balance between taxpayers and savers. And there are questions about the extent to which the burden should be shifted forward to future generations by allowing greater public borrowing now. But the harsh truth is that the bill has to be paid and we are starting to catch a glimpse of how different countries will pay it.

In the UK, Rishi Sunak, the chancellor, is known to be preparing a set of tax increases, with the stories over the weekend designed to pave the way for them. These will include some sort of increase in corporation tax, changes to pension tax relief (which need to be changed anyway), and increases in capital gains tax. The pencilled-in rises seem set to raise an additional £30bn in revenue, which may not seem a lot in the context of total government revenues of more than £800bn, or about 38 per cent of GDP. But the problem is that two-thirds of the revenues come from three taxes: income tax, National Insurance, and VAT, and the government has pledged not to increase the rates on any of these. So unless those pledges are broken – not a good thing to do in politics or indeed in life in general – Sunak has to work on the remaining third. That is what he will do.