The British finance minister on Monday canceled “almost all” of the tax cuts announced just three weeks ago, in an attempt to show financial markets that he is determined to stabilize public accounts.
In a televised communication, Jeremy Hunt said that the bottom bracket of income tax [equivalente ao IRS] from 20 percent to 19 percent will no longer be implemented in 2023, in addition to other measures.
“We are going to reverse almost all the fiscal measures announced in the growth plan three weeks ago that have not yet entered legislation in parliament,” he admitted, in an attempt to control the increase in public debt.
“At a time when the markets rightly demand a commitment to sustainable public finances, it is not right to ask [dinheiro] borrowed to finance this tax cut,” he justified.
Hunt added that the plan to freeze domestic energy prices until 2024 will only guarantee until April 2023 to “design a new approach that costs the taxpayer significantly less than anticipated, while ensuring enough support for those who need it.” .
The Executive of Prime Minister Liz Truss had already been forced to back down on other cuts due to the instability created by the impact on public accounts.
In recent weeks, he announced the rise to 25% of corporate tax [equivalente ao IRC] in 2023, instead of keeping it at 19%, and will maintain the maximum income tax bracket of 45% [equivalente ao IRS]which he intended to abolish.
The initial plan presented on September 23 in Parliament maintains the reduction of the Social Security contribution and a discount in the tax on the purchase of housing. [stamp duty] because these have already begun to be legislated.
In total, Hunt anticipated that the measures adopted today would raise around 32,000 million pounds (37,000 million euros) annually in tax revenue.
The new British Chancellor of the Exchequer unexpectedly brought forward to today the presentation of measures of the fiscal plan in the medium term, which will see the light of day at the end of the month, in an attempt to reassure the financial markets and rescue the Government.
Hunt first made a televised speech and will then make a statement in the House of Commons, which is only open in the afternoon today.
The measures are the result of negotiations with Prime Minister Liz Truss over the weekend “to ensure sustainable public finances support economic growth,” a Finance Ministry statement said.
Appointed only on Friday, the minister also met the Governor of the Bank of England and the head of the Office of Public Debt Management on Sunday night to update them on the latest developments.
Hunt was hastily recruited by Prime Minister Liz Truss to replace his predecessor Kwasi Kwarteng, whom she sacked due to the political and economic instability created by the massive tax cut program announced on September 23.
The lack of a plan to balance public accounts and reduce debt generated uncertainty in financial markets, which responded with a sharp devaluation of the pound and an increase in interest rates on British Treasury bonds.
The Bank of England was forced to intervene to prevent it from stabilizing the market and protecting pension funds with large investments in debt, but that program ended on Friday.
The government has since abandoned several of the tax cuts and promised a mid-term tax return on October 31, but markets have remained volatile and the crisis has spilled over into politics, putting the prime minister’s term at risk. Minister.
In recent days, a growing number of Conservative MPs have said they have lost confidence in Truss, who took office just six weeks after winning an internal election to replace Prime Minister Boris Johnson.
Opposition parties have called parliamentary elections, with Labor leader Keir Starmer saying Truss “is in office but not in power”.
A survey of the Inter-Union Trade Union Congress (TUC) published today indicates that the Labor Party has 43% of the voting intentions, against 28% of the Conservative Party.
* News updated at 12:03 pm
Source: TSF
