Why the UK government backed away from a plan to cut taxes on the rich
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- BBC News World
image source, Stefan Russo
Kwasi Quarting, Minister of Economy, and Liz Truss.
Britain has backed away from plans to scrap the 45% income tax rate paid by the country’s richest.
Finance Minister Kwasi Quarting told the BBC on Monday that the proposal had become a “major distraction” from what he described as the “robust” economic package.
The decision, which to many is an insult to newly appointed Prime Minister Liz Truss, comes after several of her party’s lawmakers criticized the plan.
This Sunday, Truss confirmed he would keep the controversial procedure.
A plan to scrap the 45% rate of income tax paid by people earning more than 150,000 pounds ($168,000) a year was part of a package of tax cuts announced by the Truss government just 10 days ago to boost the country’s economy.
But the financial package caused days of financial turmoil and It caused the pound to fall against the dollar to its lowest level.
Some of the country’s largest lenders have suspended mortgage deals amid the ensuing uncertainty.
“We talk to people and listen to them,” the minister said Monday morning, in statements on the morning television program. BBC breakfast.
It could have been an income tax cut for the wealthy Tax savings of approximately $3,400 annually For an individual who earns 200,000 pounds ($224,000) annually.
The government has defended the move, saying cutting taxes on the wealthy would make Britain more competitive and encourage business and investment.
“The Humiliated, the Wounded, and the Weak”
The BBC’s political editor, Chris Mason, has confirmed that the change in government plans leaves the chancellor and prime minister “humiliated, wounded and weak”.
“But Liz Truss is hopeful that (the change in direction) will create space to move forward and help her out of the political deadlock that caused the collapse of the budget announcement when it collided with political reality,” he adds.
image source, Environmental Protection Agency
Kwasi Quarting, British Chancellor of the Exchequer.
For its part, the opposition Labor Party demanded that the government completely change its economic strategy.
Labor MP Rachel Reeves confirmed the change of plans is up.”Too late“For families who will now have to pay higher mortgages in the coming years, as a result of the depreciation of the pound and the potential for higher interest rates in the country.
The leader of the Liberal Democrats, Ed Davey, has called for the minister’s resignation, claiming that he no longer has credibility“And that the whole plan needs a complete overhaul.
Other measures announced in the government’s mini-budget include lowering the basic income tax rate from 20% to 19%, as well as controversially abolishing maximum incentives or salary bonuses for bankers, which can sometimes exceed $1 million.
image source, Getty Images
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