The UK government has abandoned plans to cut income taxes for the highest paid taxpayers, part of a package of tax cuts that sparked turmoil in financial markets last week.
Finance Minister Kwasi Kwarteng announced this morning that he will not abolish the top 45% tax bracket paid on incomes above £150,000 (€171,000 at current exchange rates) a year.
These taxpayers would go to the 40% bracket.
“We perceive and hear”Kwarteng said, recognizing that the abolition of the upper echelon has “become a distraction from the primary mission of meeting the challenges facing the country”.
The retreat faces a growing number of Conservative MPs opposing the measure announced just 10 days ago, in a “mini-budget” on Sept. 23, which threatened a lead in parliament.
A few hours earlier, the conservatives had released excerpts from a speech Kwarteng was due to deliver this afternoon at the party’s annual conference, saying: “We must stay on track. I am convinced that our plan is the right one.”
Prime Minister Liz Truss had also defended the measures on Sunday, but acknowledged that she could have better prepared the announcements.
Truss took office less than a month ago and pledged to radically reform the UK economy to end years of sluggish growth.
However, the plan of a stimulus package presented by the executive on September 23 that includes £45 billion in tax cuts paid through government debt has sent the pound plunge to an all-time low against the dollar and raised interest rates on government debt.
The Bank of England was forced to intervene in the bond market and fears of a sharp rise in interest rates caused banks to suspend the sale of cheaper home loans, causing uncertainty in the property sector.
Source: DN
