Afp, London

Britain is expected to keep vast emergency financial support propping up the UK’s virus-battered economy when unveiling its annual budget Wednesday, but could also raise tax to fight surging debt. “The key thing is right now to keep supporting the economy... but also level with people,” finance minister Rishi Sunak said Sunday, as Britain from next week begins to exit its third Covid lockdown.

Britain is the worst-hit country in Europe with more than 120,000 Covid deaths and four million cases but its economic recovery hopes have been boosted by its vaccination of millions of adults.

Reports suggest that Chancellor of the Exchequer Sunak will pump out extra billions of pounds to help save jobs and businesses.

But he is expected also to increase corporation tax, or a levy on company profits, from a UK record-low 19 percent while sticking to the Conservative government’s pre-pandemic pledge not to increase income tax or value added tax (VAT). “An increase in corporation tax is likely to be, intentionally or not, the flagship measure,” Barclays said in a client note. “Put in perspective, corporation tax is not a main lever in terms of revenues -- around 10 per cent of tax receipts -- but probably the path of least resistance as the government explores ways to fix its revenue shortfall. “Prime Minister Boris Johnson’s government has in fact cut VAT on food, accommodation and attractions during the coronavirus outbreak.

It has also lifted the threshold at which stamp duty is due on home purchases, helping property buyers and the construction sector.

Both these temporary measures could be extended in the budget, according to economists.

A cross-panel of MPs, in a report Monday, said it was too soon to raise taxes and that corporation tax should eventually be raised only moderately, while being combined with continued support measures for businesses.

“It is clear that a very significant increase in the corporation tax rate would be counterproductive,” the Treasury Committee said.