As a component of a package of unfunded cuts that provoked volatility on the financial markets and brought the pound to historic lows, the British government has abandoned plans to reduce income tax on high incomes.
Kwasi Kwarteng, the head of the Treasury, stated today that he will not abolish the top 45% rate of income tax, which is applied to earnings over 150,000 pounds (NZ$297,650) annually.
He added in a statement, “We get it, and we have listened.
The reversal occurs as more Conservative Party legislators oppose the government’s tax policies that were announced ten days earlier. Additionally, it comes shortly after the Conservatives issued a statement Kwarteng is scheduled to deliver later today at their annual conference, in which he stated: “We must continue the course. I am certain that our strategy is sound.
Despite admitting she should have “done a better job laying the foundation” for the announcements, Prime Minister Liz Truss defended the policies yesterday.
Truss, who recently assumed office, campaigned on a promise to fundamentally alter Britain’s economy and put a stop to years of subpar development. The pound fell to a record low versus the dollar after the government announced on September 23 a stimulus package that includes tax cuts of 45 billion pounds (NZ$89.3 billion) to be paid for by borrowing.
Fears that the Bank of England will soon raise interest rates led mortgage lenders to withdraw their best deals, creating havoc for homeowners. The Bank of England was compelled to intervene to support the bond market.
UK repeals affluent taxpayer tax break that caused market turbulence
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