After 10 days of controversy, the Chancellor Kwasi Kwarteng announced on Monday that he has abandoned his proposal to cut the top tax rate to 45%.
The decision to announce a major reversal of the tax cut for high earners came after a week of economic turmoil in the country and after the British pound had hit record lows against the US dollar.
The new Truss-led government had revealed its new financial policy for the country’s ‘economic growth’ and with it announced a 45% tax cut for those earning more than £150,000 ten days ago.
Since it was revealed, the policy has met with strong opposition from all sides, including Conservative MPs. The government has defended the policy, saying it will promote growth.
Kwarteng’s announcement followed criticism from Tory MPs at the party’s autumn conference, currently taking place in Birmingham.
‘The abolition of the 45% tax rate had become a distraction from our mission to get Britain moving. We are now focused on building a high-growth economy that funds world-class public services, raises wages and creates opportunity across the country,’ Kwarteng concluded.
Prime Minister Liz Truss also echoed Kwarteng on Twitter: ‘We get it, and we have listened’.
The Chancellor did not rule out further reversals, including the abolition of the cap on bankers’ bonuses.
He also left open the threat of a new era of austerity to pay for the remaining £43 billion of tax cuts in his ‘mini-budget bill’, which also saw a £72 billion spending spree on debt, as well as the £60 billion support package to keep energy bills low to meet the needs of households and businesses this winter.
Domenico Santomasi
