Speaking before Westminster’s Treasury Select Committee on Monday, Mr Norman said he had been “struck by remarks” made by “experts” about potential tax hikes.
“Paul Johnson [of the Institute for Fiscal Studies] said he wasn’t absolutely sure that taxes needed to rise and I think that’s quite an interesting external view,” he told MPs.
His comments come after the Office for Budget Responsibility (OBR) projected borrowing could reach £393.5bn by the end of the financial year in March which, if correct, would be the highest since the Second World War.
These estimates were made before the latest national lockdown, though, and are now expected to rise as the budget deficit built up by the pandemic worsens.
Explaining that the OBR would do another forecast before the next Budget, he told the committee “we will have to see where they get to” before any decisions are made.
“Even after that, it will be quite difficult because we may end up with a somewhat delayed but nevertheless very pronounced bounce. There are features of the economy that would suggest that could be quite significant,” he said.
The Treasury is also reportedly looking at abolishing stamp duty and council tax to “level up Britain”, at some point later this year, implementing a national property tax in its place.
“Things would have to go pretty badly wrong for us not to begin some consolidation in the budget,” the source said.
However, Mr Norman hinted to the committee that the chancellor was looking for other ways to grow the economy that do not involve more taxation.
“He is looking to build strong, sustainable public finances over the longer term when circumstances permit that,” he said of Mr Sunak.
“And that seems to me to be a judicious recognition that some taxation could impede growth, could damage our recovery, could obstruct the transition from the extreme Covid circumstances we’re in at the moment back to something approaching normality and I think that’s a fair and proper recognition.”
Mr Norman was asked several times to signal whether tax rises would be included in March’s Budget but declined to comment. Although, he did suggest it could be a logistical nightmare to revalue residential properties under council tax reforms, saying such a process “would be an enormous job”.
“Council tax is just one form of property tax … but it is certainly a matter we keep under review and is a topic of increasingly live political interest,” he added.
Mr Sunak, who was not present, has been criticised for failing to appear before the committee on many occasions, with critics suggesting he would rather dodge scrutiny than explain his decisions.