“It is clear that the abolition of the 45 pence tax rate has become a distraction from our primary task of addressing the challenges facing our economy,” Finance Minister Kwasi Quarting said in a statement.
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The UK government on Monday backed away from a plan to scrap the highest rate of income tax, after a public backlash and major market turmoil.
It was the new government announce A slew of tax cuts just weeks after their term, But they are not well received by the financial markets. Taking the highest rate of tax paid on income over 150,000 pounds ($166,770) from 45% to 40% was seen as particularly politically damaging as Britons grapple with a cost-of-living crisis.
In the days following their announcement of the pound It dropped to an all-time lowMortgage deals were It has been withdrawn from the market British government bonds began selling at a historical price, causing the Bank of England to do so Start a temporary purchase program to smooth out fluctuations.
On Monday, Finance Minister Kwasi Kwarting confirmed that the government will cancel its plans to cut taxes on high-income earners in the country.
“It is clear that eliminating the 45-pence tax rate has become a distraction from our overriding mission to address the challenges facing our economy,” Carting said in a statement.
“As a result, I’m announcing that we’re not going to go ahead with eliminating the 45p tax rate. We’ve got it, and we’ve listened.”
The pound jumps briefly
British pound It rose sharply Monday morning on reports that the British government is preparing to announce a turn in the opposite direction. Sterling pound was 0.8% higher vs. dollar At one point, it fell to $1.1212 by 7:30 AM London time after the news was confirmed.
with the ruling Conservative Party sink In polls since the so-called “mini budget” which has also been Criticize By the International Monetary Fund in a rare move, many politicians spoke out against the proposals.
Main U-turn
Grant Shapps, the former transport minister, said in an interview with the BBC on Monday morning that rolling back the tax cut at the highest rate was a “reasonable response” because the tax cut was “for people who need it less…in an unsustainable way”.
It represents a major and humiliating turnaround for new Prime Minister Liz Truss, who has recently been insisting that she is “fully committed” to cutting.
It also revealed that the plan was at the instigation of Kwarteng and was not made public to her entire Cabinet. The Treasury said it would have provided an average of £10,000 in annual interest to the country’s largest 660,000 people.
“Repealing the 45 per cent rate has become a distraction from our mission to get Britain moving,” Truss said in a tweet on Monday.
“Our focus is now on building a high-growth economy that finances world-class public services, boosts wages, and creates opportunity across the country.”
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