November 28, 2022

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British Chancellor Kwasi Quarting backtracks on 45% tax rate cut

British Chancellor Kwasi Quarting backtracks on 45% tax rate cut

LONDON – The British government said “we got it” as it abandoned plans to scrap the highest rate of income tax for high-income earners, a key part of its pivotal economic plans that spooked markets and saw the British pound drop to a healthy level. Lowest time against the US dollar.

Prime Minister Liz Truss said on Monday, in a major turnaround for the British government That proposed scrapping of 45 percent for those earning more than 150,000 pounds ($168,000) has become a “distraction.”

The new Finance Minister, Kwasi Kwarting, issued a similar statement, saying: “We have understood it, and we have listened.”

The Truss government unveiled its highly controversial economic plan in a “mini-budget” on September 23. You will see the UK borrow billions to pay tax cuts and spending to insulate consumers from higher energy bills.

The pound fell to an all-time low against the dollar after tax cuts

Reaction to the plans was swift. Investors, fearing the moves would exacerbate inflation, ditched the pound and government bonds. In a very unusual move, the Bank of England intervened last week to stop a revolution in the financial market.

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

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The shift represents a major blow to the authority of Truss, who has been in office for just under a month. Recently, Sunday morning, she said she is committed to this policy and will stick to the tax cuts. Courting was expected to defend the measures in his address to the Conservative Party’s annual conference later on Monday.

But the government has faced a growing backlash from within its ranks, with many conservative lawmakers coming out publicly to voice their opposition to plans that offered the best paid tax cut while millions face financial pressure from the cost of living crisis.

The plans have yet to be passed by Parliament and some commentators have questioned whether they will make it through.

“I can’t support repealing the 45p tax when nurses are struggling to pay their bills,” tweeted Conservative MP Maria Caulfield, who served as Secretary of State for Health in the previous government.

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

Asked by the BBC whether he scrapped the plans because they would not get support in Parliament, Quarting said: “It’s not a question of getting it, it’s a question of getting people behind the action. It’s not about Parliament games or voting in Parliament. Common.

“It’s about listening to people, listening to voters, who have expressed very strong views on this, and overall, I think it was the right thing not to move forward,” he said.