“The removal of the 45p tax rate has clearly become a distraction from our overriding mandate to address the challenges facing the economy,” Finance Minister Kwasi Kwarten said in a statement.
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LONDON — The UK government on Monday withdrew plans to abolish the top rate of income tax after a public backlash and major market turmoil.
The new government announced a series of tax cuts just weeks after taking office, However, they were not well received in financial markets. Increasing the top tax rate paid on income over £150,000 ($166,770) from 45% to 40% is seen as particularly politically toxic as Britons grapple with the cost of living crisis. I got
Days after the announcement, the pound plunged to an all-time low, mortgage deals were withdrawn from the market, British government bonds began selling at a historic rate, and the Bank of England launched a temporary buying programme. moderate volatility.
Finance Minister Kwasi Kwarten confirmed on Monday that the government will scrap plans to cut taxes for the country’s top earners.
“The removal of the 45p tax rate is clearly a distraction from our overriding mission to address the challenges facing the economy,” Mr Kwarten said in a statement.
“As a result, we are announcing that we are not proceeding with the abolition of the 45p tax rate. We understand it and we have listened.”
Pound jumps for a moment
The British pound surged Monday morning after reports the British government was ready to announce a U-turn.The pound briefly rose 0.8% against the dollar after the news was confirmed. , down to $1.1212 by 7:30 am London time.
Several Conservative politicians voiced their opposition to the proposal as the ruling Conservative Party plummeted in opinion polls after the so-called “mini-budget” and was also criticized by the International Monetary Fund for a rare move.
Former Transport Secretary Grant Shaps said in an interview with the BBC on Monday morning that reversing the top rate cut was a “wise response”. It was an unsustainable method. ”
This represents a major and humiliating turn for new Prime Minister Liz Truss.
She also revealed that the plan had been instigated by Kwarten and had not been announced to the entire cabinet. would have brought a profit of
“Removing the 45% rate has distracted us from our mission to move the UK,” Truss said in a tweet on Monday.
“Now our focus is on building a high-growth economy that will fund world-class public services, raise wages and create opportunities across the country.”