UK abandons tax cut for the richest

one month after Liz Truss take over as Prime Minister of UK With a controversial ultra-liberal economic program, which provided for an immediate tax cut, Finance Minister Kwasi Kwarteng gave up on Monday, 3, the measure to reduce taxes on the richest, 10 days after announcing it. “It is clear that the abolition of the 45% tax rate has become a distraction from our primary mission to address our country’s challenges,” he wrote on his Twitter account. “As a result, I am announcing that we will not proceed with the tax end,” he added just hours before addressing the Conservative Party’s annual congress in Birmingham, central England. The move was meant to abolish the upper income tax bracket of 45% and was part of a broader economic package that includes lifting the cap on bank executive bonuses and reviewing planned corporate tax increases and contributions to Social Security.

Despite this withdrawal, Truss and Kwarteng did not rule out cutting public spending and social benefits, although the United Kingdom is facing a serious cost-of-living crisis, fueled by inflation of 10% and which continues to rise. The NGO Oxfam praised that the government “has understood that cutting taxes on the richest during a cost-of-living crisis is not the way forward”. The organization’s director, Katy Chakrabortty, urged “ministers not to try to balance the bills at the expense of those struggling to pay the bills and feed their families: public services, social assistance and aid are needed more than ever.” The economic plan, financed with an increase in the already large public debt, has destabilized markets in recent days. The pound recorded the lowest price in history and interest rates on UK public debt reached the highest level since the 2009 crisis, threatening the country’s financial stability. The Bank of England (BoE) had to act urgently last week to stabilize the situation, which prompted warnings from the International Monetary Fund (IMF) and credit rating agencies.

On Sunday, 2, Truss admitted that he made a mistake in the way he presented the controversial economic package, and said that he should have prepared the country better before announcing the decision. “I stand in support of the package we announced… but I recognize that we should have prepared the ground better,” the prime minister told the BBC, as the Conservative Party holds its annual conference in Birmingham. She blamed the end of the 45% tax exclusively on Kwarteng, which provoked surprise reactions. “One of Boris Johnson’s flaws was that he could sometimes be very loyal,” tweeted former Culture Minister Nadine Dorries, a staunch supporter of the former prime minister. Dorries accused Truss of “throwing his finance minister under the bus on the first day of congress.” Not only the opposition, but also public opinion and even conservative deputies – in particular those who supported the defeated Rishi Sunak in the dispute with Truss for the leadership of the party – expressed astonishment at the proposals to reduce taxes, formulated by the Minister of Finance, Kwasi Kwarteng. , when presenting the “mini-budget”. After just three weeks in Downing Street, Liz Truss is unpopular with Britons: 51% of them think she should resign, according to a YouGov poll. And she is a long way from winning unanimity within the Conservative Party, where her budget policy provokes much criticism.

*With information from AFP