U.K. Chancellor Kwasi Kwarteng backtracks on 45 percent tax rate cut

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LONDON – The UK government said “we get it” when it dropped plans to abolish the top income tax rate for the highest earners, a key part of its key economic plans that shocked markets and saw the British pound collapse to an all-time low against the US dollar.

In a major turnaround for the British government, Prime Minister Liz Truss said on Monday: that the proposed elimination of the 45 percent rate for those earning more than £150,000 ($168,000) had become a “distraction.”

Kwasi Kwarteng, the new finance minister, or finance minister, issued a similar statement, saying, “We get it and we’ve listened.”

The Truss government unveiled its hugely controversial economic plan in a “mini-budget” on Sept. 23. It would see the UK borrow billions to pay for tax cuts and spending to protect consumers from rising energy bills.

British pound falls to historic low against dollar after tax cut

Reactions to the plans were quick. Investors, fearing the measures would exacerbate inflation, dumped the pound and government bonds. In a highly unusual move, the Bank of England intervened last week to stop a riot in the financial markets.

The Conservative Party’s popularity has also declined. In a breathtaking survey by YouGov, Conservatives trailed the opposition Labor party by 33 percentage points, a gap not seen since the 1990s.

The U-turn is a huge blow to the authority of Truss, who has been in office for just a month. On Sunday morning, she said she was committed to the policy and would abide by the tax cuts. Kwarteng was expected to defend the measures in his speech to the Conservative Party’s annual conference later Monday.

But the government has faced growing backlash from within its own ranks, with several conservative lawmakers publicly opposing plans offering the highest-paid tax cuts while millions are financially strained by the cost of living crisis.

The plans have yet to be approved by parliament and some commentators have questioned whether they would have made it.

“I cannot support the 45 pence tax cut when nurses struggle to pay their bills,” tweeted Conservative lawmaker Maria Caulfield, who served as health minister in the previous administration.

Michael Gove, a senior conservative, said unfunded tax cuts were “not conservative.”

Asked by the BBC whether he was scrapping the plans because they would not get support in parliament, Kwarteng said: “It’s not about getting it through, it’s about actually getting people behind the measure. It is not about parliamentary games or voting in the House of Commons.

“It’s about listening to people, listening to voters, who have expressed very strong opinions about this, and on balance I thought it was good not to go any further,” he said.


The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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